Port Mann P3 scuttled by Victoria over lack of private finance
The B.C. Liberal government has ditched plans to build the new Port Mann bridge crossing through a so-called public-private partnership (P3) and will now finance the project directly.
That's a dramatic reversal for Victoria which just a few weeks ago announced that it would underwrite $1.15 billion of the $3.3 billion cost of the P3 project to keep it afloat when it became clear that the P3 consortium couldn't raise the cash on its own.
Macquarie Group, the Australian infrastructure investment bank leading the P3 consortium was to have underwritten another $1 billion of the construction costs with its own equity with the remaining $1.15 billion financed by a number of banks.
The day after that announcement, Macquarie admitted that it faced huge asset write-downs on its global infrastructure investments including other toll highways.
The bank blamed higher financing costs and lower traffic volume for its problems.
The head of the government agency charged with promoting P3s says that direct public financing of the project will save approximately $200 million in financing costs.
A recent report by the forensic auditing team of Ron Parks and Rosanne Ternhart found that P3s in B.C. are costing taxpayers more than if they were publicly financed. The report was commissioned by CUPE.
The province's plan to rebuild the Port Mann Bridge and widen Highway 1 through a public-private partnership has collapsed.
Transportation minister Kevin Falcon said B.C. will now directly and fully finance construction of the new 10-lane bridge and recoup the money through the $3 tolls to be charged to cross it.
The proposed partnership had been led by embattled Australian infrastructure firm Macquarie Group, which has seen its stock price plunge as the global credit crunch deepens.
"We have determined that a traditionally financed arrangement is the better way to proceed at the current time," Falcon said.