Saint John builds P3 business case over water system

Members of Saint John council met on Thursday morning to review the public-private partnership process with the head of the federal government's P3 Canada.

John McBride, the chief executive officer of P3 Canada, guided city councillors through the arrangement and explained the various scenarios under which public-private partnership models work.

"We provide funding, and I like to think we share our expertise in the implementation of those projects," McBride said during a special meeting of council.

"We have projects right across the country from urban transit in Toronto to the refurburishment of the Iqaluit Airport in Nunavut. So it’s happening in many places and in many sectors."

Saint John is considering a move that could see a private company build and operate its new water treatment system. It is mandatory that municipalities take a serious look at that option if they want to get financial help from the federal government.

Johanna Mullen, a consultant with Pricewaterhouse Coopers Canada, told city councillors this week that under the P3 arrangement, financial risks are borne by the private operator and its lenders.

"For them to get paid those fees to operate and maintain they have to meet your specifications laid out at the front end," she said.

Mullen said typically the city's payments for the system are spread over, and included in a 30-year operating contract.

Moncton adopted a P3 model

Greater Moncton's water treatment system was built 13 years ago and continues to be operated by the private company, Veolia Water. The French company handles water treatment systems for more than 100 million people worldwide.

Ensor Nicholson, who is in charge of the water supply in Moncton, said before Veolia took over, the city "had a series of boil water orders that were very concerning."

He said companies in the business of doing public private partnerships offered to have a new system up and running in 18 months.

Nicholson said there were no surprises along the way.

"[Veolia Water has] done an excellent job in treating the water and they work very, very closely with city staff," he said.

"We've had a very, very good relationship with the operator."

Veolia has a 20-year contract to operate the water system for Moncton, Dieppe and Riverview.

Meanwhile, there has been broad political support for upgrading the Saint John system for several years and the idea of a public-private partnership has been raised consistently.

The city’s existing water-treatment system meets all regulations but it is an aging system.

The new rough estimate puts the cost of a new system at $220 million, which is up $55 million from estimates as recently as last fall.