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MONTREAL — Former Quebec premier Lucien Bouchard has been brought in to help the Montreal transit authority's efforts to negotiate an agreement by the end of June with Bombardier (TSX:BBD.B) and Alstom Canada for new subway cars valued at about $1.2 billion.
"We can say that for at least several months things dithered, but the negotiations are now proceeding," transit authority chairman Michel Labrecque told reporters Wednesday after presenting the city's transit plans to the Montreal Board of Trade.
Bouchard will help oversee three teams of negotiations that are going on simultaneously. The former Parti Quebecois premier has mediated several conflicts since retiring from politics and returning to his law practice.
The province, which is paying 75 per cent of the cost, and the city, which is ponying up the rest, would ultimately decide how much extra they are willing to shell out.
Published reports suggest the consortium bid came in 50 per cent over budget at $1.8 billion.
While some might question the high cost of adding 336 new subway cars, Labrecque said the new cars will be around for decades.
"I don't know why we would have a product of inferior quality," he told reporters.
"We want a quality Metro that will last 45 years and Bombardier and Alstom have the desire to make that Metro."
The city has committed to earmark more money towards transit and passengers will have to contribute more as well, he said.
However, Labrecque said fare increases will be less than inflation to avoid triggering any ridership losses. Canada's second-largest transit system had a record 382.5 million passengers last year.
The Quebec government requires that 60 per cent of the contract have Canadian content with final assembly in Canada.
Labrecque said all sides are focused on achieving an agreement. However, he warned that failure could result in the contract being re-tendered, which will "have consequences," including delivery delays.
Bombardier and its French rival buried the hatchet last November to submit a joint bid to supply the new transit cars. The move followed Alstom Canada's legal victory in winning the right to tender.
The company challenged Quebec government's decision in May 2006 allowing just Bombardier to bid for the work.
The trains are scheduled to enter into service between July 2012 and October 2014, following test trains running in November 2011.
Montreal's transit authority is also looking at beginning to install GPS devices on its fleet of buses within two years as part of a program to inform passengers when a bus will arrive at certain stops. Labrecque said passengers may eventually be notified about the location of a certain bus by email or text message.
Bombardier's shares closed down three cents to $3.90 in Wednesday trading on the Toronto Stock Exchange.
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