While Auckland remains waiting on the government to commit to its share of funding for the most transformative transport project since the Harbour Bridge – the City Rail Link – the NZTA have just announced that they’ve shortlisted three groups of companies to build the Puhoi to Warkworth motorway as Public Private Partnership.
In the past the NZTA have said the project could cost around $760 million however as PPPs are just glorified hire purchase arrangements it means that over the course of the loan it will cost us considerably more than that. As an example the Transmission Gully project in Wellington costs around $1 billion however after the interest accrued during construction is capitalised it pushes up the cost to about $1.3 billion. That cost is then paid off back to the private companies which the NZTA say will likely be $120-$130 million annually.
That cost might be justified if the current road was heavily used however it isn’t and even the NZTA’s own analysis during the consent hearings admitted it was only really busy a few times over summer. Neither is it the economic saviour of Northland like the government and some other politicians claim. For starters it finishes just north of Warkworth and from there north traffic is normally around 10,000 vehicles per day. Also if this new road was really going to make a difference in connecting Northland with the rest of the country then why hasn’t the existing toll road done that, or even the extension that got the motorway to Orewa/Silverdale in the early 1990’s.
Unfortunately we’ve not been allowed to see the business case for the project as in the past when asked the NZTA they’re keeping if secret until after they’ve awarded the tender.
Here’s the press release:
The NZ Transport Agency has today taken another step towards building the new Pūhoi to Warkworth motorway by announcing the consortia shortlisted to progress to the next stage of the project.
Transport Agency Chief Executive Geoff Dangerfield says the building of the motorway is a significant step towards improving the safety, reliability and resilience of State Highway 1 between Northland and the upper North Island freight triangle of Auckland, Waikato and Tauranga.
In September 2014, a Board of Inquiry confirmed approval of the Transport Agency’s application for designation and resource consents for the project. This was followed, in May 2015, by the Cabinet approving an application by the Transport Agency to procure the motorway through a Public Private Partnership (PPP).
The Cabinet approval came after the Transport Agency determined, following an extensive business case analysis, that the project met the Treasury’s criteria to be procured as a PPP.
The consortia shortlisted to receive a Request for Proposal (RFP) for the financing, design, construction, management and maintenance of the Pūhoi to Warkworth project under a PPP are:
- Northlink – made up of Cintra Developments Australia Pty Ltd, InfraRed Infrastructure III General Partner Ltd, John Laing Investments Ltd, Ferrovial Agroman Ltd, Fulton Hogan Ltd.
- Northern Express Group – Made up of Accident Compensation Corporation, HRL Morrison & Co Public Infrastructure Partners, Acciona Concesiones S.L., Fletcher Building Ltd, Macquarie Group Holdings New Zealand Ltd, Acciona Infrastructure Australia Pty Ltd, The Fletcher Construction Company Ltd, Higgins Contractors Ltd.
- Pacific Connect – made up of Pacific Partnerships Pty Ltd, VINCI Concessions S.A.S., ACS Infrastructure Australia Pty Ltd, Aberdeen Infrastructure Investments (No.4) Ltd, Leighton Contractors Pty Ltd, HEB Construction Ltd.
Mr Dangerfield says the announcement of the shortlisted consortia comes after a rigorous evaluation and selection process.
“We are very fortunate to have such high-quality companies and organisations showing an interest in the Pūhoi to Warkworth project. All of these companies and organisations have sound experience in delivering large infrastructure projects.
“I’m confident that any of these consortia can deliver a high-quality motorway which will provide greater resilience, improved road safety and journey time reliability, and a better connection for freight, tourism and motorists.”
Mr Dangerfield says the RFP will be issued to the shortlisted consortia later this month and the Transport Agency expects to announce a Preferred Bidder by mid-2016.
Subject to successful contract negotiations with the Preferred Bidder, the PPP contract for the project is expected to be awarded in October 2016.
He says the Pūhoi to Warkworth project seeks to procure a PPP contract that would deliver a value-for-money motorway which will assist economic growth in Northland.
“A PPP contract will likely see the PPP consortium manage and maintain the motorway for the 25 years that will follow the anticipated six-year period to build it.”
“PPPs are a particularly suitable procurement method for delivering great results for large-scale and complex infrastructure.
“Using a PPP for key infrastructure projects will open the door for private sector innovations that are not always achievable under traditional public sector procurement methods.
“PPPs allow specific outcomes to be established and measured – and for risks to be identified and transferred to the private sector.
“An outcomes-based PPP for the Pūhoi to Warkworth project will also allow great flexibility within the designation to achieve optimised innovative outcomes.”
Mr Dangerfield says that under a PPP, full ownership of the motorway will always remain with the public sector.
“The nature of the contract to be used will provide a strong incentive for the successful PPP consortium to deliver the best possible results for road users.”
Tentatively, construction of the Pūhoi to Warkworth motorway, under a PPP arrangement, could possibly start in late 2016 with the road completed and open by 2022.
Mr Dangerfield says no decision has been made on tolling for the Pūhoi to Warkworth route but should the motorway be tolled, the Transport Agency would retain responsibility for tolling.
“The public would be fully consulted on any tolling proposal which must also obtain Ministerial approval,” he said.
He says the Transport Agency will continue to consider PPPs for other large-scale and complex infrastructure projects which could potentially benefit from the innovation and value-for-money that can be achieved through a PPP approach.
The first state highway in New Zealand to be delivered through a PPP is the Transmission Gully (MacKays to Linden) project in Wellington.
In July 2014, the Transport Agency signed a PPP contract with the Wellington Gateway Partnership (WGP). Work on Transmission Gully began in September last year, and the motorway will be open for traffic by 2020.