‘Time has come’ for $3B dedicated passenger track, Via Rail chief says

The chief executive of Via Rail, Yves Desjardins-Siciliano, is optimistic the Crown corporation will be able to find private financing for a $3-billion dedicated passenger Montreal-Ottawa-Toronto line that he believes could eliminate the company’s deficit.

Desjardins- Siciliano, 59, said Via will discuss funding options with potential investors over the summer and will bring proposals to its sole shareholder — the federal government — by the end of this year or early 2016.

“I’m cautiously optimistic that the time has come,” said Desjardins-Siciliano after delivering a speech in Montreal on Tuesday to the Institut pour le partenariat public-privé, an organization that promotes public-private partnerships.

He said Via will meet with the Caisse de dépôt et placement du Québec, the Ontario Municipal Employees Retirement System and the Ontario Teachers’ Pension Plan, which he describes as “the usual suspects who invest in passenger rail across the world,” to gauge interest in providing funds to build the line.

“In Canada, it just so happens that in the past 30 years we have developed world-class expertise in public private partnerships that have made some of our largest pension funds invest in passenger rail services in England, in Europe and across Canada,” said Desjardins Siciliano.

The Caisse de dépôt said it can’t commit to investing in any project until it determines the returns for its depositors.

“The Caisse has shown its interest in good infrastructure projects,” said Maxime Chagnon, senior director of media relations at the Caisse de dépôt.

“We always analyze business opportunities that are submitted to us and each one is different, so we will never close the door to a good opportunity, that’s for sure.”

Chagnon said that although the pension fund invests in projects around the world, it is especially familiar with the Canadian business environment.

“We know that market better of course because it’s our home turf, but we have to analyze every project on its own merit,” Desjardins Siciliano said.

The Ontario Municipal Employees Retirement System declined to comment and the Ontario Teachers’ Pension Plan could not be reached.

Desjardins-Siciliano said potential investors could come from outside Canada, though the company would not disclose the names of any foreign organizations it might work with.

Desjardins-Siciliano said the final decision for partnerships in financing, manufacturing and construction would be left to the government.

“Who ultimately bids and wins the competition is left to the market and the government procurement rules,” said Desjardins Siciliano.

“We’re not taking anything for granted and we’re not setting the table for anything other than what is the best solution at the cheapest cost to the Canadian taxpayer.”

Desjardins-Siciliano expects the return on investment for the project to be in the “mid-teens” and that construction would be completed within five years of establishing a partnership.

He said that Via currently sharing the tracks with several companies transporting merchandise is slowing down the potential frequency of the faster passenger trains because of increased traffic.

Between 2010 and 2014, the number of people using Via Rail’s services dropped to 3.8 million from 4.1 million.

The company’s deficit reached $317 million.

“Via Rail is an increasing burden on Canada’s taxpayers due to deteriorating on-time performance and the lack of frequencies to be relevant,” Desjardins-Siciliano said.

Desjardins-Siciliano has been CEO for just over a year, moving from his previous post as Via’s chief corporate and legal officer.

Over the past six months, he has been holding presentations for members of the finance community along the corridor, promoting a High Frequency Rail project that would send more trains along the line, as oppose to a High Speed Rail that would cost $9.4 billion.

Desjardins-Siciliano said that if the project did increase ridership by his expected 3.5 times to more than seven million riders a year, it would eliminate the deficit of Via Rail’s operations.

He said that if the initial project is profitable, in a second phase the tracks could be extended east from Montreal towards Quebec City, and west from Toronto to London, Ont.