Public-Private Partnerships: #18615551 Public-Private Partnerships: Exporting the Canadian Model Ilan Dunsky Partner and Co-Chair Infrastructure and Public-Private Partnerships 1 Place Ville-Marie, Suite 3900 Montreal, Quebec H3B 4M7 Ilan.dunsky@dentons.com November 10, 2015

PPP in Canada: Success of the Model Canada did not invent the PPP but has become market leader over past 10 years. 238 projects closed or ongoing, in nearly every province + federal government Hospitals, highways, transportation, energy and facilities (sports & leisure facilities, municipal facilities) Very high success rate (99%+). Contrast to other jurisdictions. Other countries looking at Canada to determine reasons for success of PPP programmes. November 10, 2015

PPP in Canada: Reasons for Success Relatively broad consensus regarding the advantages of this infrastructure development model. Depoliticisation of PPP procurement process. Some opposition remains. Flexibility: Each province has adapted P3 to its own circumstances and objectives. Conversely: Convergence of contractual and commercial parameters. Three widely-used models: British Columbia (Québec) / Ontario /Alberta (Saskatchewan). Broadly similar, with some variations in risk allocation, treatment of defaults, financing risks. Key word: Predictability. November 10, 2015

PPP in Canada: Why is predictability so important? Most P3s are bundled (DBFO). Bidders are required to determine most optimal approach to design, construction and operation issues during the bid stage. Financing is committed during the bid stage. Result: highly evolved and granular bid stage. An enormous commitment of resources and funds is required from both the Authority and each bidder. Predictability of both the bid process and the risk allocation for each project is required to allow bidders to cost both the bid itself and the project with a high degree of foresight and accuracy. In addition, compensation of unsuccessful bidders. November 10, 2015

PPP in Canada: How is predictability obtained - Legal Framework Many countries have developed legal framework for PPP: Bid process Selection of winning bidder Risk allocation issues Very little similar legislation in Canada. Most provinces and federal government already have robust procurement guidelines and expertise. In some Canadian jurisdictions, guidelines have been amended to permit combined technical and financial scoring (to replace lowest compliant bid rules). In Canada, PPP is primarily governed and regulated contractually: RFP Project Agreements November 10, 2015

PPP in Canada: Procurement Process RFQ stage RFP stage CCM Process Clarification Process Periodic re-issuance of RFP and Project Agreement Final bids are based on common assumptions, common understanding of the risk allocation for each project. Very involved process; role of advisers is extremely important. Typically three complete advisory teams (Authority, Sponsors/SPV, and Lenders). November 10, 2015

PPP in Canada: Project Agreements PA is highly advanced at time of RFP and is included in RFP. Risk allocation has been determined by Authority. Flexible, but must follow market acceptability and financeability considerations. Subject to CCM process, which includes discussion of questions raised by bidders and lenders. Risk allocation does change during CCM process but not afterwards. Risk allocation issues commonly raised include: Relief events and compensation events Environmental liability Pre-existing conditions Compensation on termination provisions Termination procedures Relationship between Authority remedies and Lender remedies. 17 septembre 2018

PPP in Canada: Success Story Result: Very low failure rate. Only two or three projects have entirely failed once process has been launched. BC: 43 Alberta: 21 Ontario: 118 Quebec: 18 Other/federal: 38 Largest: Site C: $8 billion + (total project costs) Champlain Bridge: $4 billion + (total project costs) Smallest: around $20-30 million Most projects are in the $300 million - $1 billion range. November 10, 2015

PPP in Canada: Dentons’ Role Canada: 15 full-time lawyers, plus approximately 10 more, in 3 offices. Globally: Approximately 40 full-time lawyers. Examples of recent projects (by Canadian team): In Canada Internationally Champlain Bridge Replacement (Quebec) Cap Haitien Port Rehabilitation (Haiti) Site C Hydroelectric Facility (B.C.) Michigan Freeway Lighting (USA) Turcot Interchange (Quebec) Indianapolis Consolidated Justice Facility (USA) Saskatoon Civic Operations Centre (Saskatchewan) Lesotho Health Clinics (Lesotho) Northeast Anthony Henday Drive (Alberta) Grenada Replacement Hospital (Grenada) North Commuter Parkway (Saskatchewan) Baie-Saint-Paul Hospital (Quebec) Barrie Transit (Ontario) November 10, 2015

Speaker contact details Ilan Dunsky Partner D +1 514 878 5833 E ilan.dunsky@dentons.com November 10, 2015