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The New Champlain Bridge for the St. Lawrernce River Corridor Project PPP
The Champlain Bridge is one of the busiest bridges in Canada. Built in 1962, it was not designed to handle today's high volume of traffic 60 million crossings per year for next 30 years. The challenge with the existing Champlain Bridge is its original design. Its deck is a structural component of the bridge and is a key element holding it up. Public transit is important to the residents of Montréal and the South Shore who cross the bridge every day. The New Champlain Bridge for the St. Lawrence River Corridor project will include a dedicated public transit corridor.
This bridge is an essential component of Canada's multimodal transportation system. The central location of this Continental Gateway facilitates international trade and the domestic inputs towards foreign trade with the United States and other key trading partners. It includes strategic ports, airports, intermodal facilities and border crossings as well as essential road, rail and marine infrastructure that ensures this transportation system's connection to, and seamless integration with, Canada's other gateways: Asia-Pacific and Atlantic.
The total cost of the project is 4.239 billions CA$. This amount includes the 3.977 billions CA$ contract between the Government of Canada and the New Champlain Bridge for the St. Lawrence River Corridor project, which covers the construction period, to begin in June 2015 and end in the fall of 2019, as well as a subsequent 30-year operating period. The agreement includes the new Champlain Bridge, the new Île-des-Sœurs Bridge and reconstruction and widening of the federal portion of Highway 15 (See Figure 1).
A governance structure was established to ensure formal collaboration and effective information exchange among relevant stakeholders. The Ministère des Transports du Québec, Agence métropolitaine du transport and the cities of Montréal, Longueuil and Brossard, amongst others, are actively contributing to the project.
This Public-Private Partnership PPP allows a risk sharing between the government and the private partner and provides financial certainty to the government and to taxpayers because the difference in borrowing rates between states and investors in private infrastructure is a little bit of an illusion. Infact, the taxpayer doesn't have any default risk if the borrowing is through the concessionaire, whereas, he does have default risk if the borrowing is through the government.
A pre-feasibility study in 2011 explain the raison to use expansive private capital in PPP is to motivate and incentivize real efficiency gains. As Tony Gomez-Ibanez explain in the WorldBank MOOC JUNE 2015 on PPP, the first source of these efficiency gains is that there is a single person or entreprise that is responsible for the building and the maintenance and the operation of the facility. A second source is to provide the concessionnaire with more scope to decide how to produce the services themselves and to explore more efficient methods and designs.
This pre-feasibility study examined also bridge and tunnel options, and evaluated transportation needs, traffic demands, environmental aspects, implementation modes and financial considerations. The business case results confirmed that the concessionnaire will be responsible to deliver the project at a pre-determined price with meaningful penalties in case of contract defaults and that it must also offers guarantees that the infrastructure will be well maintained for the duration of the contract.
For SNC-Lavallin, this PPP is a symbolic and reputational victory as the company tries to rebound from a damaging ethics scandal that first came to light in 2012 concerning the Padma Bridge project in Bangladesh. As report by Global Research, January 5 2015, on a 600 corrupt companies World Bank blacklist, 117 are Canadian and 115 represent SNC-Lavalin and its subsidiaries. After Canada, the U.S is in second place on with 46 listed. That’s followed by Indonesia 43 firms and Britain 40 firms.
Bangladesh is not the only place where SNC-Lavalin is alleged to have engaged in fraud and bribery. In 2014, during public hearings of La Commission d’enquête sur l’octroi et la gestion des contrats publics dans l’industrie de la construction au Québec, the SNC-Lavallin's former CEO, Pierre Duhaime, was arrested in connection with allegations of corruption surrounding a contract for the McGill University Health Centre. SNC-Lavalin is also alleged to have been engaged in corrupt pratices in Lybia and Algeria, two countries with high levels of economic and political risk, as report Januray 30, 2015 by OCDE Historical Country Risk Classification.
The bid requirements for the Champlain Bridge contract stipulated that no company, affiliate or member of a board of directors could have been convicted of a criminal offence in order for their consortium to qualify. SNC-Lavalin is facing corporate fraud and bribery charges, but has not been found guilty of anything. This raises, however, moral questions. Who is responsible for rogue employees? Who should be held accountable for corruption, fraud and bribery? Only the individuals who committed the acts? Or the company as a whole?