PPP Canada

1. PPP Canada Build Infrastructure Better Northern Economic and Sovereignty Infrastructure Conference Iqaluit, Nunavut October 13, 2010 Dale Booth Senior P3 Advisor, PPP Canada

2. What is PPP Canada? • PPP Canada - A New Federal Crown Corporation • Visible federal commitment to P3s • Reporting through Minister of Finance • CEO and Chair appointed in 2009 • Providing funding and advisory support services for the development Canadian P3 market • www.p3canada.ca

3. About Us • PPP Canada’s Mission: • To improve the delivery of public infrastructure by achieving better value, timeliness and accountability through P3 procurement. • Corporate Objectives: • More P3 projects by leveraging incentives, demonstrating success and providing expertise • Better P3 projects by promoting P3 best-practice and capacity-building

4. Strong Private-Sector Leadership • PPP Canada is led by an accomplished board with significant private-sector and procurement experience • Chair is Mr. Greg Melchin – former Alberta minister • Mr. Jacques Lamarre – former CEO of SNC Lavalin • Mr. Tony Comper – former CEO of Bank of Montreal • Mr. Bill McMackin, CA – former partner at KPMG • Ms. Carol Pennycook – law partner at Davies Ward Phillips & Vineberg LLP • Mr. Peter Armstrong – Executive Chair and CEO of the Armstrong Group • Mr. John McBride – CEO of PPP Canada • Board engaging key federal Ministers in informal discussions

5. What is a P3? A cooperative venture between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards.

6. P3 Benefits • Budget certainty • Eliminate delays in project delivery • Transfer project risk • Accelerate capital investment programs • Unlock unrealized asset values • Generate project revenues • Innovation • Canada Line Rail • project in Vancouver • completed on budget • nearly three months ahead of schedule • Dokis First Nation • $43 million project • upgrading an existing water control dam • dam was on PWGSC’s surplus asset list • Sea-to-Sky Highway Improvement Project • Project in BC • Innovative design incorporating widening, straightening, additional passing lanes, increased median barrier use and use of reflective markings

7. The Canadian P3 Market • Canada is viewed as a premier market for P3s by the private sector • Significant disparities in P3 adoption/market between jurisdictions • Provinces have been early adopters of P3s: • Large infrastructure requirements • P3s regularly used in Transportation and Healthcare sectors • Beginning to see critical mass of P3 projects in operation phase • Some municipalities are adopting P3 procurement policies: • Winnipeg • Edmonton • Calgary • Federal departments are beginning to look at P3s to procure their capital asset requirements

8. Recent Canadian P3s • Projects in procurement show P3 model is expanding to new sectors: • Canada: • CSE HQ • RCMP Surrey HQ • BC: • 1 Health Centre • 1 Transportation • Quebec: • 2 Transportation • 2 Correctional Facilities • 1 Health Centre • Alberta: • 14 Schools • Ontario: • 8 Health Centres • 3 Courts • 2 Policing • 2 Transportation • 1 Nuclear • 1 Detention Centre

9. Market Outlook • Fundamentals driving Public Sector interest in P3s and growing pipeline: • Aging infrastructure base in Canada needs replacement • Fiscal constraints • Positive Private Sector receptivity to the model: • Maturation of the project sponsor/consortia community • Increasing investor interest in Infrastructure as asset class • Credit markets have been turbulent but appear to be coming back • Credit spreads are coming down from Fall 08 peak of around 400bp but costs have not reached pre-crisis levels, impacting value for money • Increased sensitivity to risk turned attention to substantial completion payments, wide equity etc. to reduce risk, challenging project affordability • Successful projects are building public confidence in the model but there are still challenges

10. The P3 Canada Fund • A $1.2 Billion fund to stimulate the adoption of P3 procurement by Provinces, Territories, Municipalities and First Nations • Targeting: • Useful public infrastructure in areas of federal interest • Well structured, value for money P3s • Projects that build the P3 market • Staged Selection and Application Process • Nature and level of funding support dependent on project: • Maximum 25% of construction costs • Range of potential instruments including contributions, loans and loan guarantees • Stacking rules with respect to Federal funding apply to the P3 Canada Fund

11. Round 2 Call for Submissions closed June 30, 2010 Details and Submission Guide available at www.p3canada.ca 73 projects – total capital cost ~$11B, from 9 provinces and territories 7 water or wastewater projects 13 energy or green energy projects 18 transportation and transit projects 12 First Nations projects Several sports, recreation and tourism-related projects were also submitted Preliminary Assessments in September 2010 Expecting to invest $200M - $300M through Round 2 Two Round 1 funding announcements to date: $50M to the Maritime Radio Communications Initiative (Atlantic Provinces) Up to $25M to the Chief Peguis Trail Extension Project (Winnipeg, MB) The P3 Canada Fund – Round 2

12. P3 Canada Tools and Services • Advisory services and training on P3s: • P3 Canada will have a roster of pre-qualified consultative resources that can assist P3 project development and training • “Incubator” for early stage P3 projects to grow the market and maintain a pipeline of projects • Seed funding for feasibility and business case development • P3 Officials can assist in examining your project through the “P3 lens”

13. P3 Canada Fund Eligible Categories • Water and Wastewater • Public Transit • National Highway System • Green Energy • Disaster Mitigation • Solid Waste Management • Brownfield remediation and redevelopment • Sports infrastructure • Connectivity • Local roads • Shortline rail • Short Sea Shipping • Regional and Local Airports • Tourism infrastructure • Cultural infrastructure

14. P3 Project Team Skill Set • A P3 project team must have the necessary skills to conceive, evaluate and implement partnership arrangements. The team will: • examine feasibility and identify their preferred options, • prepare a business case to support the project, • validate options with the community and the private sector, • determine the procurement strategy to engage and select business partners, • recommend the selection of a business model and partner to the community, • conduct negotiations, and • create the long-term partnership structure for the project • Must be able to manage an open, fair and transparent procurement process, using P3 Best practices, to choose the partner

15. PPP Canada 100 Queen St. Ottawa, ON K1P 1J9 dale.booth@p3canada.ca (613) 992 4634 www.P3canada.ca

16. Annex I: What Kinds of Projects Make Good P3s? Four fundamentals to look for: • Is it public infrastructure? • Size: $45 million+ capital asset • NEW construction (usually) • A departure from the government’s core competencies Types of infrastructure: • New accommodations/real property (e.g. LEED office complex, specialized facilities like prisons/labs) • Major transportation projects (e.g. Confederation Bridge, Hwy 407) • Other infrastructure projects, when specific performance output requirements can be identified

17. Annex II: Success features of P3 Projects Plan • The project is suitable for a P3 approach and is outside political interference • A clear and confirmed vision, guiding principles, needs and objectives • All viable options explored and examined whether or not they lead to a P3 • The Project must be Biddable Procure • A procurement plan that draws on industry-based lessons learned and best practices • Opportunity to introduce innovation throughout the project life-cycle • Checks and balances to ensure the viability and deliverability of the P3 solution • The Project must be Bankable Perform • Implemented management tools that enhance the partnership • Facilitated knowledge and skills transfers to clients’ management teams • Manage the contract and relationship within a P3 Partnership • The project must be Manageable

18. Annex III: Financial Requirements • An identifiable revenue stream source is required for P3s to support availability payments • The long term availability payments can be required up to 20 years depending on the P3 project • Sound financial track record will be important to private partners

19. Annex IV: Private Sector Partners • Foreign firms were initial sponsors of early Canadian P3 Projects and several have established Canadian Subsidiaries: • Bilfinger Berger (Germany) • Carillion (UK) • Plenary (Australia) • Babcock & Brown (Australia) • Acciona (Spain) • Canadian headquartered firms are starting to enter the P3 sector as Project Sponsors, including: • Forum Equity Partners • Fengate Capital Management • Ellis Don • Foreign lenders still dominate the debt financing of P3 projects but the big 5 Canadian banks are getting in the game • Canadian construction firms are key partners in the project consortia • Private sector concerned with lack of standardized processes and documentation, which makes bidding costly and adds to bidding risk