North East Link PPP valued at up to AUD 9bn

26 November 2018 - 12:00 am UTC

Victoria called for Expressions of Interest (EoI) for it’s AUD 15.8bn (USD 11.45bn) North East Link motorway (NE Link) on Monday (26 November) following the government’s landslide re-election on Saturday (24 November).

As the Labor government was set to increase its majority, it moved quickly to kick off procurement of NE Link, with a target for financial close by the third quarter of 2020 on the “primary package”, which EOI documents say involves an availability PPP over the entire project worth between AUD 7bn and 9bn.

The design and construction aspect of the PPP will involve 6km long, three-lane twin tunnels, running from the Eastern Freeway north to Somers Avenue in Melbourne’s eastern suburbs.

The private investment required in the development phase, from financial close until expected completion in 2027, would be “no more” than AUD 5bn, according to the tender documents. The state is offering a 25-year operate and maintenance concession beyond that.

The government said the private sector would finance the concession, which includes the tunnels, and will cover maintaining and operating 11km of new motorway along with the existing Eastern Freeway between Hoddle Street and Springvale Road that NE Link will connect to. However, following traffic “ramp up”, expected to take between two and five years, the state may tip in further funds.

The federal government has committed AUD 1.75bn to the project and the state government has said it will fund the rest of the construction cost.

EOIs will be due by 10 May 2019, the RFPs by the third quarter of that year, with bids due in by the first quarter of 2020. Construction is due to start that year and take seven years to complete.

The government has imposed conditions aimed at increasing competition in both construction and financing in the local market.

As reported, the EOI specifically rules out CIMIC’s CPB Contractors, John Holland and Lendlease working in the same bid group.

The EOI documents also state that banks should be allowed to back more than one bid group, but no more than two of Australia’s “big four” banks can lend to any one bid group.

The North East Link Authority noted full planning approvals have not yet been given and an Environment Effects Statement is not due to go out for public comment until mid-2019.

However, it said the EOI process would allow it to identify interested parties and draw up a shortlist to move to the RFP stage. 

It is offering to pay up to AUD 50m of unsuccessful bidders costs. 

 

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