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Book uncovers dangers of P3s

Private-public partnerships explained

By: Matt Preprost

Posted: 06/8/2010 1:00 AM | Comments: 0 (including replies)

Add this to your reading list, councillors and citizens -- an award-winning Winnipeg professor is set to launch his new book tonight, blasting the hidden dangers of private-public partnerships, including a few sharp jabs at Veolia Canada.

John Loxley, an economics professor at the University of Manitoba, will release Public Service, Private Profits, which includes case studies of major private-public partnerships -- or P3s -- in Canada over the past two decades.

"What I tried to do was produce a book that explains what they are and what the economics and financial aspects of P3s are, and how you go about analyzing them," said Loxley, who has been working on the book since the late '90s. "It has to do with how you evaluate the projects, and on what terms you should get involved.

"It's designed to be accessible. It's for people who are interested and involved in what's happening in Winnipeg."

One of the studies includes multinational mega-firm Veolia, who the City of Winnipeg has hired to design and build $661 million in upgrades to two sewage-treatment plants and help manage them for 30 years.

While the book doesn't look specifically at the Winnipeg deal, it does look at a similar deal Veolia has with the City of Moncton, N.B.

Loxley maintains Winnipeg's agreement with Veolia seems to be following much the same script.

"It was sold as a cheaper alternative," Loxley said, noting that, in the end, Moncton ended up paying $31 million for a $23-million water-treatment plant, while Veolia made 24 per cent profit.

City officials in Moncton say they've had a good relationship with Veolia for more than a decade.

In Winnipeg, the France-based company will manage and run the renovated plants for 30 years, reportedly saving the city between 10 and 20 per cent of the expected total $1.2 billion operating and capital costs.

Still not made public is how much Veolia will make in profits, the penalty the city must pay to terminate the deal, exactly who covers cost overruns, and from where exactly the 10 to 20 per cent savings will come.

Most of that information is considered proprietary and not even councillors nor Mayor Sam Katz have access to it.

"There is a tremendous lack of information of what these deals actually are. It's very difficult to get information on them," Loxley said, adding he's still waiting for information on the Charleswood Bridge, another case study in his book.

Loxley will launch his book at Mondragon Bookstore and Coffee House on Albert Street at 7 p.m. Loxley won the prestigious 2010 John Kenneth Galbraith Prize in Economics in March, for a demonstrated contribution combining economic analysis with a commitment to social justice.

matt.preprost@freepress.mb.ca

Republished from the Winnipeg Free Press print edition June 8, 2010 B3

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