Aus & NZ: Acciona pursues NSW for AUD 1.1bn losses on Sydney tram

13 April 2018 - 12:00 am UTC

Acciona Infrastructure is suing the New South Wales government for more than AUD 1.1bn (USD 852.9m) over the extent of changes to utilities needed to construct Sydney Light Rail.

It today released a claim filed with the NSW Supreme Court, which alleges misleading or deceptive conduct.

The contractor is responsible for civil works, including building the 12km line from Circular Quay in the city centre out to Randwick.

It alleges that within hours of financial close on 27 February 2015, it received details of changes to utilities required from electricity network operator Ausgrid that “diverged to a significant degree” from what it had agreed with the NSW government.

It claims it was not allowed to directly contact Ausgrid about its requirements for dealing with utlity pits, that have to be moved to lay new tracks. At the time Ausgrid was wholly-owned by the NSW government.

Acciona’s statement of claim said it could only get these details from Transport for NSW between March and October 2014. A schedule of required works was then finalised on 15 December that year.

The statement of claim was released on Friday (13 April), following a NSW Supreme Court directions hearing. 

It alleges the document it initially received from Ausgrid was dated October 2014, when Acciona – and the consortium responsible for delivering the project, which Acciona is part of – were still in negotiations over the utility changes needed.

The tram will run down the middle of George Street, Sydney’s main thoroughfare, along narrow streets to the city’s south then out to the southern suburb of Randwick.

The winner of the PPP was the ALTRAC consortium (previously Connecting Sydney) – which included Transdev, Alstom, Acciona, financial adviser Capella Capital and equity investors First State Super, John Laing and Acciona Concesiones.

Acciona estimates its losses are about AUD 1.106bn and is seeking compensation for this.

Its claim said it is due to receive AUD 966m from the ALTRAC consortium for the work, but so far has already incurred costs of AUD 1.07bn and estimates it will cost another AUD 670m to complete the project and another AUD 175m for “overheads and management costs”. It also expects to be slugged with “liquidated damages” by ALTRAC, including delays in construction, of about AUD 147.4m.

It is understood Acciona has been trying to negotiate changes to the contract ever since the alleged discrepancy between what it had agreed with the government and Ausgrid’s requirements emerged and has asked for mediation of the dispute.

But on 22 February it is understood Acciona wrote to Transport Minister, Andrew Constance, threatening legal action.

Constance wrote back in March claiming it did not have a contract with Acciona. Instead it was with the ALTRAC consortium, which has contracted Acciona, and any dispute should be raised with ALTRAC.

Constance responded to the court action today, declaring it was “outrageous, it’s absurd and we’re going to fight it hard in the courts”.

“Transport for NSW will vigorously defend their position in the Supreme Court. But there is one message to the Spanish contractor: do your job, adhere to the contract in place with ALTRAC,” he said.

Justice David Hammerschlag on Friday directed the NSW government to file a response to Acciona’s claim by 23 May, before the next directions hearing due on 25 May.