Alternative financing for infrastructure projects

Building infrastructure throughout the province is a key component of Alberta’s Recovery Plan. By building schools and hospitals, for example, not only do communities get brand new buildings that serve local needs, but throughout the construction phase, many Albertans benefit from good-paying construction related jobs.

It’s no secret that the combined impact of the COVID-19 pandemic on the heels of a plunge in the global price of oil has caused a financial crisis like no other in Alberta’s history. This reality, though, opens up new opportunities.

Alternative financing approaches, including Public Private Partnerships (P3s) and Unsolicited Proposals (USPs), help fund projects and attract private investment to our province. These partnerships complement the traditional capital planning process and investment in priority infrastructure.

Many Albertans are familiar with P3s – public-private collaborations where contractors ensure that the projects be completed on budget, on time and to a high standard. In this model, contractors agree to longer term-operational contracts that have performance requirements that be reviewed by government for compliance.

This process has been used to build and maintain schools and other infrastructure projects since 2008. In fact, the 40 schools built under these contracts are owned and operated by various school jurisdictions and are maintained by the P3 contractor.

Additionally, the Evan-Thomas Water and Wastewater Treatment Facility in Kananaskis Country was expanded and upgraded using the P3 delivery method. EPCOR designed, built and provided partial financing for the project and is responsible for its operation until 2024.

Using this type of alternative financing has many upsides – it provides cost and schedule certainty, an extended warranty and the ability to spread the capital cost over time. We recently updated our P3 guidelines to enable a broader range of P3 ideas and approaches.

Not all projects are suitable for P3 delivery and any potential projects must show value for money. Part of the Alberta P3 process is making public the value for money assessment – as we have for every P3 delivered in the province – so that Albertans know that it is a good deal for them.

Another approach to alternative financing is using Unsolicited Proposals (USP) to attract investment ideas.

A USP allows the private sector to identify new and innovative ways to deliver public infrastructure. If there is a need in a community, the private sector can submit a proposal to government. This gives government the ability to process unsolicited infrastructure opportunities in a rigorous, transparent and consistent manner. One of the most important aspects of this process is the assessment of affordability for government. Any ideas need to demonstrate value for money.

Implementing the USP process shows government’s commitment to attracting private sector investments to the province. It also shows industry that we are open for business and ready to go. We invite the private sector to submit proposals anytime via email to [email protected].

Together, P3s and USPs can attract private sector investment to Alberta and foster new economic activities. This will help generate new projects that will get many Albertans back to work.

As noted in the Economic Recovery Plan, a key partnership that can help transform Alberta P3 and USP projects from concept to implementation is the Canada Infrastructure Bank (CIB). Where the private sector can identify an infrastructure project in the public interest, they can apply to CIB for funding at a low interest made possible because CIB is a Crown corporation. The CIB is leveraging $35 billion to attract private capital and co-invest with the private sector and institutional investors in supporting infrastructure development.

We just have to look around the province to see CIB in action. CIB is working with Alberta Agriculture and Forestry as well as eight irrigation districts to modernize irrigation infrastructure to expand agriculture production and diversify value-added food processing in southern Alberta. This would represent the largest single investment in Alberta’s irrigation infrastructure.

Alberta Transportation is working with CIB to complete studies and due diligence for the Calgary-Banff Rail project. This project would support the province’s economy by creating an airport-rail link to downtown Calgary and Banff National Park. This is critical infrastructure to increase tourism opportunities while ensure workforces access, all the while protecting the environment by reducing greenhouse gas emissions and reducing congestion on Highway 1.

Other opportunities to improve infrastructure could include increasing broadband and energy retrofitting of government buildings, health care facilities, schools and post-secondary institutions. This work needs doing and will support our goal of economic recovery and diversification.

Alberta’s Economic Recovery Plan is a rigorous approach to investing in public infrastructure. Pursuing public and private financing opportunities helps broaden opportunities for investment today - that is, getting Albertans working today - so the infrastructure needs of tomorrow will be met.

Learn more about Public-private partnerships and unsolicited proposals and the Canada Infrastructure Bank.