“This project will be the largest infrastructure project in Canada,” Ehren Cory, president and CEO of Infrastructure Ontario (IO), said on May 30. “This partnership will ultimately reduce the project’s overall cost while continuing to protect taxpayers.”
CIB’s partnership with IO and Metrolinx will add to the transformation of the GO rail network in the Greater Toronto and Hamilton Area and significantly improve service for commuters, the bank says in a statement.
CIB’s investment will improve the cost of financing and attract private capital while ensuring appropriate risk transfer to the private sector.
The bank will be a financing partner and advisor to Metrolinx and IO. Metrolinx an IO are the co-sponsors and are leading the competitive procurement process including announcing the preferred proponent.
CIB financing will be offered in the form of a standardized debt financing package to all proponents during the request for proposals open period. CIB will finalize a credit agreement with the preferred proponent selected by IO and Metrolinx when the project reaches financial close.
The CIB, through its federal government guarantee/backing, allows infrastructure projects to access lower-cost financing, thus reducing their overall cost and allowing projects that would be otherwise uneconomically viable, to move forward.
CIB says this is its second transit investment, following the recently announced $1.28 billion commitment to Montreal’s Réseau express métropolitain (REM) project. In the first year of its 10-year investment period, CIB has invested almost 10 per cent of its total capital. CIB is poised to achieve its minimum of $5 billion in urban transit investment.
Four consortia are currently competing for part of the GO project, which will the rail corridors’ capacity. The teams – EnTransit, MTR Kiewit, ONcore Transit and ONxpress Transportation Partners – each include of major transit, construction and banking firms
The Globe and Mail reports that Canadian companies play roles in several of the bids, including SNC-Lavalin doing design, operations and maintenance for the team EnTransit. Bombardier is tasked with operations and maintenance for the ONcore Transit bid. Three of the consortia have Canadian banks acting as financial advisers.
The competing teams also encompass a wide range of international transportation and construction players. Among them are RATP Dev, Deutsche Bahn, Alstom, Siemens, AECOM and the Hong Kong transit provider MTR.
“We are asking the private sector for their best, most innovative solution to a simple challenge: move people from point A to point B within a certain time frame,” the newspaper quoted provincial Infrastructure Minister Monte McNaughton as saying. “We aren’t telling them what technology or design to use. We have confidence in the private sector’s ability to find the most efficient solution.”
Metrolinx CEO Phil Verster said in the published report that the agency was officially agnostic about many aspects of how the companies structure their bids, not specifying which signalling systems or rolling stock was favoured. “Also left to the bidders’ discretion was whether the current diesel-powered trains should be replaced by trains powered by externally provided electricity or by a hydrogen fuel cell,” the Globe and Mail reported.
The former provincial government initially introduced the GO Transit changes as part of a larger transportation plan. The original Liberal approach, with the name Regional Express Rail, had a $13.5 billion cost.