Friday, May 5, 2017

The Port Mann Bridge was doomed to fail financially because ....? of the lack of traffic. 2009 report

The BC Liberals just can't apologize straight out for placing tolls on Metro Vancouver bridges, with the one exception, this election promise of a $500 ceiling.


  "The folly of being seduced by availability payment mechanisms for PPP roads"

September 23, 2009

Robert Bain: In support of user-paid tolls

The Macquarie Infrastructure Group (MIG) labels itself "one of the largest private developers of toll roads in the world", a claim substantiated by the fact that this particular infrastructure fund operates nine separate assets in six different countries.  One of these assets alone is a 2,200km toll road network in France.

However, MIG's recently released full-year financial results made for sobering reading.  Valuation write-downs were this year's theme.  Westlink M7 (Australia) down from A$802m (US $668m) in 2008 to A$359m in 2009; Chicago's Skyway and the Indiana Toll Road (USA) down from A$236m to A$148m and A$344m to A$98m respectively; while the UK's M5 Toll skydived from A$2.2b to A$412m.

The whole portfolio suffered a 40% drop in assets value, crashing from A$8.6b to A$5.1b in just one year.
The reason?

Traffic performance that failed to match expectations features large.

Macquarie is not the only toll road operator to be suffering in the current climate.  But before we declare that the model is broken, as some would have us believe, let's be very clear about which model we're referring to. 
Commentators have labelled the phenomenon 'silting-up'.  That's what happens when you buy infrastructure, such as roads, on the government's credit card, rather than exploring what consumers might actually be willing to pay for premium facilities like user-paid toll roads.


Google Search Criteria:  Macquarie, Laila Yuile, Sea to Sky, Port Mann Bridge


Journal of Commerce 2012:
Premier Gordon Campbell unveiled plans for a new 10-lane superbridge on Feb 4, 2009.

... The government initially reached an agreement-in-principle with Connect BC Development Group for a public-private partnership (P3) for the construction of the new bridge on Jan. 28, 2009.

However, the consortium, which included Macquarie Group, Transtoll Inc., Peter Kiewit Sons Co. and Flatiron Constructors Canada Limited, couldn’t get financing.

When negotiations with MacQuarie collapsed, the government changed the procurement process from a P3 to the traditional design and build model.


Lylymay said...

Omigod! This is Friday May 1 and I just got a call from the BC Libs - usually the local candidate, but it was actually mz christy on the phone. Of course I pushed the # key a thousand times hoping to f-up the recording. Anyhow, must comment on the whole Port Mann fiasco.
We live in Coquitlam and for the most part, avoid the Port Mann as much as possible.
However, when heading into the US, the easiest route is to the truck stop which means we must PAY. I have registered with TREO and use my Visa card so that I can avoid that ridiculous extra charge of which they can secure on a 30 second computer inquiry, so have consented to give them my Visa Card.

Bottom line: I went over the PM on Dec 22 and it was mid Feb before my Visa bill showed the $3.15 charge, which I paid for on Mar 24. That is when the BC Govt received my payment. Being someone who worked in Finance for the BC Govt, I also am aware that they pay a fee to Visa for collecting that $3.15 fee! I can assure you that Peter Kietwit - recipient of their wondrous 3-P arrangement, does not wait until the 24th of March (or later) to be paid that $3.15 charge, nor do they incur any fees to Visa for that privilege!

As a person who understands provincial finances, I must conclude that Peter Kiewit waits NO TIME for the $3.15 fee crossing and does not have to incur the fees Visa charges either. I suspect that the taxpayers are paying MORE than they realize for this wonderful P-3 arrangement. Kiewit gets first dibs on the ROI (return on investment) until their debt is retired and it is only then that the debt, which has been growing astronomically, really starts to pay off the FULL cost of building that bridge. So just where do the taxpayers benefit from a P-3 arrangement? and I would say it costs us much more than the cost of building the bloody bridge by a huge amount.

Anonymous said...

frpc - macquarie

Anonymous said...

Hugh said...

Vancouver needs more traffic (???) Traffic in Vancouver is not heavy enough?

Anonymous said...

john perkins

North Van's Grumps said...

Confessions of an Economic Hit Man is a partly autobiographical book written by John Perkins published in 2004.

According to Perkins, his role was to convince leaders of underdeveloped countries (Canada) to accept substantial development loans for large construction and engineering projects that would primarily help the richest families and local elites, rather than the poor, while making sure that these projects were contracted to U.S. companies. Later these loans would give the U.S. political influence and access to natural resources for U.S. companies.

North Van's Grumps said...

Anon frpc Macquarie $20,550.00

Anonymous said...

7 min Video opinion of election topics