After numerous setbacks and significant cost overruns, the long-awaited rail system in Montreal, Canada, has finally commenced operations. The ambitious project, known as the Réseau Express Métropolitain (REM), was initiated by the Caisse de Depot et Placement du Quebec (CDPQ) in 2015. The primary aim of the venture was to connect Montreal-Trudeau International Airport and several suburbs to the city center. However, the project encountered several unforeseen challenges, including the Covid-19 pandemic and the discovery of explosives from a century ago in a tunnel. As a result, the budget escalated from the original estimate of $5 billion to over $7 billion.
The first phase of the REM, which spans 67 kilometers (42 miles), was inaugurated on Friday and connects the southern suburb of Brossard to Montreal's central station. The next phase, which extends to the western suburbs, is scheduled to commence next year, with the airport station expected to be fully operational by 2027.
Despite the hurdles encountered, CDPQ CEO Charles Emond remains optimistic about the project's success and views it as a potential blueprint for similar initiatives worldwide. Emond lauded CDPQ's ability to conceive, design, plan, execute, and finance such a large-scale project, distinguishing the organization as a rare player in this field. He expressed confidence in CDPQ's capability to undertake international projects of a similar nature.
The financial backing provided by CDPQ has been crucial in ensuring the project's completion, especially in comparison to other transportation projects that have been abandoned due to financial difficulties, such as New York's AirTrain to LaGuardia Airport. The governments of Canada and Quebec jointly invested approximately $3 billion, with CDPQ covering the remaining costs, including overruns. CDPQ expects a return of 8% to 9% over a 30-year period.
CDPQ is currently involved in a bidding process for a proposed high-frequency train project that would connect Toronto and Quebec City. This endeavor has the potential to become one of Canada's largest transportation ventures ever. However, Emond noted that the financial structure of this project is likely to differ from that of the REM, as the construction industry has evolved, and engineering firms are now more cautious about assuming risks.
Former head of CDPQ's infrastructure group, Macky Tall, who now serves at Carlyle Group Inc., believes that private sector involvement is pivotal for the success of public transit projects. Tall emphasizes the importance of partnerships with private investors, citing their financial contributions and expertise in efficiency and execution.
The true test for CDPQ's REM project, however, lies ahead. The pandemic-induced shift towards remote work has led to a 15% decrease in ridership on the Montreal transit network. Additionally, fewer individuals are projected to utilize the new REM system, with a 7% decline expected from 2019 to 2022. Hisham Negm, a transportation researcher at McGill University, questions whether the construction of a light rail system was the most suitable choice, as a bus rapid transit may have been sufficient given the reduced demand.
Despite the challenges and uncertainties, the completion of Montreal's REM is a significant achievement for CDPQ. The success of the project will not only impact Montreal's transportation landscape but also serve as a potential catalyst for future large-scale ventures both domestically and internationally.