Title: CANADIAN INFRASTRUCTURE FINANCE. HIGHWAY 407 TOLL FINANCING DANCE
Abstract:Canada backed away from private financing of Highway 407, citing the high-risk premium and traffic volume guarantees as reasons for pulling out. The article states that this was Canada's first attempt...Canada backed away from private financing of Highway 407, citing the high-risk premium and traffic volume guarantees as reasons for pulling out. The article states that this was Canada's first attempted private infrastructure venture. The 58 km (36 mi) toll highway north of Toronto will be done under a guaranteed maximum price contract with performance bonds and completion guarantees. The article reports further that it was improbable that a satisfactory risk-reward balance would have been struck. The benefits of public financing include: lower cost of capital, government control in evaluating the price and value of competing bids, more leverage in the international debt market and with contractors, design-build contractors assume all completion risk, and all surplus revenue is left for the government. Final design of the system is expected next year, allowing for new information to be integrated as it becomes available--particularly regarding all-AVI (automatic vehicle identification) collection systems.Read More
Publication Year: 1994
Publication Date: 1994-04-01
Language: en
Type: article
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