Highway 407 privatized

The Ontario government has sold Highway 407 to a private consortium that includes SNC-Lavalin as one of the three major owners. The government held a lengthy and complex bidding process to find a buyer for the electronic toll road that runs east-west across the north of Toronto. As part of the deal the SNC-Lavalin consortium has to construct two new extensions to the 69-kilometer highway, so that eventually it will be a 108 kilometre link between Oakville in the west and Markham in the east.

The consortium will do just about everything but drive the cars on the highway. They are to own, operate, design-build (construction has started) and finance the extensions. They paid $3.1 billion for the privilege. In return they will be able to collect tolls at rates set according to traffic flows. They will lease the corridor of land for 99 years. The government’s intention was to have the extensions built “at no cost to taxpayers.”

Montreal-based SNC-Lavalin has a 23% interest in the consortium and will invest $175 million in equity and $175 million in debt. Grupo Ferrovial of Spain is the largest consortium member with a 61% share in the bid. Its subsidiary, Cintra, operates 13 toll roads in Spain, Chile and Colombia.

The central part of the highway was designed and built by Canadian Highways International Corporation (CHIC) which includes AGRA. They were also competing for the project. Other engineering firms involved in unsuccessful bids included Totten Sims Hubicki, Proctor and Redfern, Delcan, N. D. Lea, Marshall Macklin Monaghan, and McCormick Rankin.

Helping the government to run the bidding process were engineering consultants Dillon Consulting and Parsons Brinckerhoff.