Back in June 2020, I wrote about the gradual drift in the planned dates for various Metrolinx projects as reported by Infrastructure Ontario [IO for short].
The September 2020 Market Update has been issued by IO and it shows changes in some projects from the June update.
Sept 26, 2020: Revised to include the change in financing method for the OnCorr GO Corridor project.
Is The P3 Model Falling Apart?
Two revisions in the large GO project procurement model involve a change from private sector financing to traditional government borrowing.
This suggests that the market willingness to finance projects on behalf of the government, or at least to do so at rates competitive with direct government borrowing, may be on the wane. That implies that the “P3” model may be coming unglued.
At its heart, this was always seen as an accounting mechanism to shift debt off of the government’s books, and without this shell game, a major argument for P3s could vanish.
The Future of Electrification
The change in financing model could shift any decision on propulsion technology back to the government.
Metrolinx had pushed this off its plate by saying that the bidders who were going to design and operate a future GO network would make that choice. This punted the knotty political problem of hydrogen trains touted former Premier McGuinty out of Metrolinx itself.
Will Ontario be willing to finance the large up-front capital costs of electrification itself with so many other pressures on financial resources, or is electrification about to fall out of consideration while spending focuses on service expansion?
The project is in three sections of which the last will be the “Northern Civil, Stations and Tunnel” which includes the portion of the line east of the Don River and north to Eglinton, but not the Maintenance Facility which is included with the “South Civil” portion as it is needed relatively early in the project.
Some of the work on the North section between the Don River and Gerrard Station might be undertaken as part of the GO Corridor improvements, but exactly what this might entail has not been made public.
Since the last update, there are three changes for the North section:
- The date for RFQ (Request for Qualifications) issue has been changed from Winter to Spring 2022.
- The RFP (Request for Proposals) issue has been changed from Spring 2022 to Fall 2022.
- The Financial Close (in effect, the contract signing) has been changed from Fall 2023 to Spring 2024.
The remaining portions of the line are on the same timeline as before.
The timelines for this project, with financial close for the first two portions in fall 2022 and for the third in spring 2024 puts this beyond the next provincial election expected in mid 2022, the four-year anniversary of the Ford government’s election. Who will be in place to make final decisions, and what the government’s financial position will be by then, remain to be seen.
Line 2 East Extension (Scarborough Subway)
This project is now shown with two portions: one for the tunnel, and the other for the stations, railway and systems.
There is no change in the tunnel portion of the project, but the remaining portion has reverted to the dates shown for the overall project in the Winter 2020 update.
GO Expansion Lakeshore West Corridor
The financial close for this project has been changed from Winter 2021 to Spring 2021.
GO Expansion Lakeshore East-West Corridor
This was originally to have been a “Build-Finance” project, but it is now “Design-Bid-Build”, a change that was made in August 2020 according to the IO report.
GO OnCorr Projects
[Added to this article on September 26, 2020]
This is a very large project including future operation of GO Transit and possible changes in the propulsion technology.
The procurement model has been changed from “DBOFM” (Design-Build-Operate-Finance-Maintain) to “DBOM”. The proponent will no longer finance the project which has a projected value of over $10 billion.
All other projects are unchanged. A summary of the Metrolinx projects tracking their changing status is available in this spreadsheet (revised version).