Queensland nears decision on Cross River Rail

19 March 2019 - 12:00 am UTC

Queensland is expected to name a preferred bidder for the tunnels and stations PPP on the AUD 5.4bn (USD 3.9bn) Cross River Rail in the coming week, numerous sources told this news service. 

The biggest PPP since the AUD 6bn Melbourne Metro in 2017 is likely to be granted to either a consortium led by Plenary Group or one headed by CIMIC, sources close to and outside the bidders said. 

Market chatter initially focused on the CIMIC-led group, but has swung in favour of Plenary winning the contract in recent weeks. This has not been confirmed, however, and a spokesperson for the Cross River Rail Delivery Authority did not return calls seeking comment.

One source close to a member of the Plenary consortium expects the Queensland government to announce the winner for the PPP and a separate alliance contract by the end of the week, but said the announcements may be pushed into next week.

Counter arguments from sources connected to and outside CIMIC’s group have argued it is the front runner due to the inclusion of Acciona in Plenary’s group.

The Spanish construction company is in the midst of a billion-dollar law suit against the NSW government over Sydney Light Rail. Acciona is also in Plenary’s AUD 1.6bn Toowoomba Second Range Crossing motorway PPP.  

It is argued the Queensland government would not want to over-expose itself to one construction contractor on two major projects, especially if it is one prone to litigation.

Meanwhile, market sources believe Capella Capital is not considered likely to win. The logic is Capella is affected by the decision of its parent Lendlease to sell its engineering and services division and eventually retreat from future PPP projects.

However, Lendlease Chief Executive Stephen McCann said last month the company is confident it can win contracts for the PPPs it is bidding on.

Another source familiar with Capella’s consortium said they believe it is still in with a chance.

The source argued Laing O’Rourke’s recent licence suspension by the state Building and Construction Commission makes it more likely that subsidiaries of CIMIC will win the separate rail, integration and systems alliance contract it is also bidding on.

The two groups vying for the alliance contract are: River City Alliance, including Laing O’Rourke and Systra; and the Unity Alliance including CIMIC’s CPB Contractors and UGL. 

If CIMIC is awarded the alliance contract, the state may be unlikely to award it both the alliance and PPP contracts, the source added.

However, on 13 March the Commission lifted the suspension on Laing O’Rourke’s licence after the company transferred cash to its Australian operations.

The three shortlisted consortia for the PPP are:

– Qonnect Finance, including Capella Capital, John Holland, Lendlease and QIC Global Infrastructure;

– Pulse, including CIMIC’s CPB Contractors, Pacific Partnerships and UGL, DIF Infrastructure V, Grupo Ghella and Royal BAM Group.

– CentriQ Partnerships, including Plenary Group, Acciona, GS Engineering & Construction, Salini Impregilo and Spotless Group.

The PPP aspect covers 5.9km of tunnels and stations under the Brisbane city centre and the Brisbane River. The full project stretches 10.2km.

The three consortia declined to comment.

 

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