Premier David Alward at the Saint John water funding announcement

Premier David Alward says the Saint John water treatment project will create a "significant" number of construction jobs. (Neville Crabbe/CBC)

The City of Saint John is getting nearly $115 million to upgrade its water treatment system under a public-private partnership model.

The federal and provincial governments will each contribute $57.3 million to the Safe Clean Drinking Water project.

Officials made the announcement at City Hall on Friday afternoon.

"To put it in perspective, this is the largest municipal infrastructure project ever carried out in New Brunswick," said Saint John MP Rodney Weston.

"This is big," he said to applause.

A new water treatment plant and accompanying infrastructure for Saint John has been estimated at $220 million, although the actual cost won't be known until a private partner is found.

Saint John's ratepayers will cover the remainder of the mega-project's costs, beyond the $114.6 million.

"This is the renaissance city, and today is the proof," said Saint John Mayor Mel Norton.

The work is expected to be completed in 2018, he said.

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Saint John MP Rodney Weston called the project "innovative" and said his government is proud to help move it forward. (Courtesy of the Atlantic Canada Opportunities Agency)

As it stands, the city's water is barely treated. It passes through screens, chlorine is added, and then it is pushed through pipes that are prone to failure.

A water main break along Rothesay Avenue in February left much of the city under a boil water order.

Some of the pipes in the city pre-date Confederation, the mayor said.

"This vital investment is about providing Saint John residents with safe and clean drinking water and building a strong foundation for new development and growth throughout the region," said Premier David Alward.

The project will create a "significant" number of construction jobs, he said.

Saint John plans to build a new 100 million litre per day drinking water treatment plant, three new 11 million litre storage reservoirs and 15 other water transmission system improvements.

Under the proposed P3 model, project risks, including design, construction, financing, operations and maintenance will be transferred to a private partner, who will be responsible for any cost overruns or delays, officials said.

Only option

Council had voted in March to move forward with a public-private partnership to finance the project.

Weston had previously said Saint John council had no choice but to push forward with a public-private partnership on the new water system.

He said the project is too expensive for the federal government to come up with one-third of the cost.

In the past, large infrastructure projects, such as the water system upgrade, would be funded equally by the federal, provincial and municipal governments.

But federal rules now say municipalities must, on more expensive projects, consider adding a private sector partner.

PricewaterhouseCoopers said in March the city could save $3.2 million by using a P3 model instead of the traditional procurement model.

But Saint John's former commissioner of Saint John Water, Paul Groody, has warned privatization of water would be a "costly, wasteful, avoidable mistake."

Groody contends a public-private partnership would be more expensive and too costly for ratepayers over the long run.

In 2008 the federal government announced the creation of the $1.2 billion P3 Canada Fund, and in the Economic Action Plan 2013 the government provided an additional $1.25 billion over five years to renew the P3 Canada Fund.

The fund is managed by PPP Canada, a Crown corporation responsible for advancing Canadian P3s through the provision of expert advice and support to all levels of government.