Next Sydney Metro stages may use private finance

30 July 2019 - 12:00 am UTC

New South Wales may look to private finance for two forthcoming Sydney Metro projects as a major construction company announced a new joint venture to bid for them.


The AUD 20bn (USD 13.8bn)-plus Sydney Metro West will run from Sydney’s city centre west to Parramatta, while the AUD 15bn-20bn Sydney Metro Greater West will extend from the city’s northern suburbs south to the new Western Sydney International Airport.


The state government has promised AUD 6.4bn from its own coffers for Sydney Metro West and AUD 2bn for Metro Greater West, as reported.


Both metros are being procured at the same time. Metro Greater West is the latest addition, although this is due to be completed first by 2026 when the airport is due to open.


“A number of packaging, contracting and transaction processes are being considered for Sydney Metro West and Sydney Metro Greater West, including the potential for use of a Public Private Partnership (PPP),” a Sydney Metro spokesperson said in an emailed statement. The spokesperson didn’t give a timeline on when procurement decisions would be made.


“Sydney Metro intends to seek feedback from industry through ongoing coordinated engagement. No decisions have been made.”


At an industry briefing on Sydney Metro West and Greater West (then called Sydney Metro Western Sydney Airport) in December 2018, the government said while it will consider a PPP for Sydney Metro West, it warned it would need to take account of “industry appetite” given the high number of projects that are taxing the construction market at the moment.


The state said at the time it was planning to use fixed price contracts for the project but had made some provision for “collaborative contracting arrangements that are consistent with industry appetite”. Collaborative contracts are being favoured by construction companies to reduce their risk. These are usually not compatible with PPPs, as reported.


John Holland teams up with RATP Dev

Meanwhile, Chinese-owned John Holland, and French metro operator, RATP Dev, announced on Monday (29 July) they had signed a memorandum of understanding to bid together on operations and maintenance tenders for both metro projects.


The move marks RATP’s first entry to the Australian market and it will shortly set up a base in Sydney.


John Holland is in the Northwest Rapid Transit consortium that in 2014 won the PPP tender to operate, maintain and finance the line and rolling stock on the first stage of the metro – Sydney Metro Northwest. That includes Hong Kong’s MTR, CIMIC’s CPB Contractors and UGL as well as Plenary Group as financial sponsor.


Sources close to John Holland said while it is not known yet how Sydney Metro West and Greater West will be procured, there would at least be tenders for the private sector to build, operate and maintain the projects.


Should the government seek private finance as well, the pair would look to add consortium members to bid as needed.


“It is only natural we want the next generation of Sydney Metro to grow and improve, and Sydney Metro West and Greater West are opportunities to create a new level of service for our customers,” John Holland CEO Joe Barr said in a statement.


RATP Dev CEO Laurence Batlle said it so far it had 200km of new driverless metro operation contracts. Sydney Metro’s trains are all planned to be driverless.


Several advisers close to the Sydney Metro projects have told Inframation the government wants to see different groups vying for the right to build the latest stages to those that bid the recently-opened North West Metro.


Because the Sydney Metro Northwest runs onto Metro City and Southwest, it made sense for the government to extend the PPP from the Northwest section through to the southern sections of the line.


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