BC wants investors for Coquihalla tollroad

The government of British Columbia is looking a sell investors a 55-year toll concession on a 109km (68mi) segment of the Coquihalla Highway. In return for the right to toll and operate roadside businesses the franchisee will maintain, operate, and rehabilitate the highway as needed. No official is on the record about the expected cost of the concession but local press reports have suggested the province is hoping to get about $420m (C$600).

The road was built by the province in 1986 to provide s a higher quality pass through the mountains for longer distance traffic going from coastal BC to Alberta and further east. It traverses a scenic pass in the spectacular Cascade Mountains that is heavily used by tourists, hikers, and mountain climbers.

A traveler says that driving the road is exhilarating "as you go from misty coastal cedars and tall firs to bright sunlight on the high rock faces in the space of half an hour." The area was first explored by Hudson Bay Company agents in the early 19th century and then saw unknown thousands of hunters, trappers, fur traders, gold seekers, and loggers.

The Coquihalla Highway has been operated by the province since it opened as a tollroad in the mid and late 1980s. It is denoted BC-5.

The toll levied at a single mainline plaza at the 55km (34mi) point ranges from $7 (C$10) for a car to $33 (C$50) for a tractor trailer. It grosses about $30m (C$45m) a year with operating expenses of about $7m (C$10m) for a net operating surplus of about $23m (C$35m). The province says that maintenance and rehabilitation costs over the term of the planned concession will be about $550m (C$800m).

The Ministry of Transport in a backgrounder says that the road cost $640m (C$955) to build and has cost $150m (C$225m) in operations over 17 years while it has produced $370m (C$550m) in tolls. Traffic has been growing but is still only an average 8k vehicles per day.

If you assumed the need for say 7% interest on capital debt service would be $45m, plus $7m operations then costs are $52m, not much short of twice toll revenue. A substantial write down of the capital will clearly be needed to make the project work for investors. Major repaving work will be needed in the future with the pavement now 17 years old.

The road is mostly 2x2-lanes and in places has third climbing lanes. It is a high quality motorway whereas the former premier road, the Trans Canada Highway, is an undivided 2-lane road. The Coquihalla is a main route north and east from the Lower Mainland, as they describe the coastal area around Vancouver, into central BC beyond the east of the Cascade mountain range. It provides a more direct and higher quality route than the Trans Canada Highway (National Route 1) between Vancouver and Calgary (and points east) and is favored by longdistance trucks because it saves an hour to 90mins, and is much safer.

The province proposes that under a private franchise there will be a $9 (C$13) toll for occasional users in private cars, an increase of 30%. However for frequent users there will be a $35 (C$50) 90-day unlimited pass, so someone traveling an average of one trip per day would pay only 40c (C56c) per trip. After 4 trips per quarter they would be saving on a pass. Commercial vehicle tolls will stay the same.

The province has not laid down any procedures for adjusting tolls. Normally some inflation adjustment is allowed if toll rates are to be controlled, but the details are apparently being left to the the proposers to propose, then negotiate.

The provincial materials say that about 80% of the traffic is non-local and unable to take advantage of the proposed quarterly pass.

The province expects to issue a request for proposals this autumn and to select a franchisee by the end of the year.

Already a couple of local groups have expressed interest, among them the man described in the local press as BC's "richest businessman" Jimmy Pattison, and the local Teamster's union which commands large pension funds.

Protests

There is a quite vocal movement at the northern end of the road protesting the proposed "sale" of the road. The BC motorists organization and the provincial truckers association also oppose the plan.

So far however there are no signs that this will derail the project.

The Liberal Government of BC say they are not "selling" the road since the government retains legal title and they are setting legally binding terms of service. Moreover the private sector operators will relinquish control at the end of the concession term.

The Coquihalla Highway begins at Hope on the Fraser River about 150km (90mi) east of Vancouver. Built in the mid-1980s it goes about 200km (120mi) northeast through the mountains to Merritt and Kamloops, main cities of the center of the province. It has one major steel arch bridge, and rises to about 1300m (4000ft). The road is equipped with impressive avalanche protection "snow sheds" or tunnels, but heavy snow makes for very expensive snow clearance. Avalanches also have to be dealt with by a Bush policy of preemptive strikes. Special guns are set up in the winter to shoot developing avalanches. The road traverses some of the most beautiful country in this mountainous province and is a handsome road. The official website has Quicktime movies of trips along the road.

Traffic at the toll plaza is a modest 8k vehicles per day but has been growing. Toll collectors at up to 14 toll lanes accept cash or credit cards. (fax Andrew McLenan 604 443 1426 http://www.th.gov.bc.ca/reoi/home.htm) TRnews 2003-06-30