Third group forming for Inland Rail PPP

23 April 2019 - 12:00 am UTC

Spanish construction company Acciona and Macquarie Capital are forming a third group to bid for the AUD 3.5bn (USD 2.5bn) Inland Rail PPP, according to sources familiar with the matter.

US construction company Fluor and Spanish contractor Ferrovial have also been linked to the pair, according to three sources.

A spokesperson for Acciona said that while the company is interested in the Inland Rail project, no comment would be offered because things have not been confirmed officially yet. Spokespeople for Fluor and Macquarie declined to comment, and Ferrovial spokespeople did not respond to calls and emails.

The other consortia so far involve CIMIC and its subsidiaries, including Pacific Partnerships, with John Holland, advised by MUFG, according to several sources. Plenary Group, Italian construction company Salini Impregilo, Australian contractor Clough and Korean construction firm GS Engineering & Construction have formed another group, as reported.

On 29 March, the federal government-owned Australian Rail Track Corporation (ARTC) called for expressions of interest by 24 May for the PPP. Those shortlisted are likely to be notified by the third quarter of this year, with request for proposal documents due in the following three months.

The project will be an availability PPP involving the construction of 126km of the Inland Rail project – between Gowrie near Toowoomba to Kagaru about 60km south of Brisbane – and operating and maintaining it for 25 years.

The winning consortium’s obligations will include the construction of three tunnels in the Toowoomba, Little Liverpool and Teviot ranges of 6.5km, 1.1km and 1km, respectively, as well as 126km of single and dual gauge rail tracks, 37 bridges and 21 viaducts.

The expression of interest documents say the ARTC will “most likely” make a capital contribution of 50% of the upfront cost of work during the development and construction phase. The government’s contributions will be available once “the majority” of senior debt is drawn down and 100% of equity is contributed or committed.

The full Inland Rail line will stretch more than 1,700km between Melbourne and Brisbane and is likely to cost more than AUD 10bn by the time it is finished in 2025.

Federal Labor commits to inquiry

The tender is being run during a federal election campaign, with the poll to be held on 18 May. The federal Labor Opposition party supports the project, but on Tuesday (23 April) Shadow Infrastructure Minister Anthony Albanese fleshed out plans for an inquiry into the project if it wins the election.

Labor will appoint an “eminent Australian” to inquire into the route selection – particularly greenfield sections in central and northern NSW and as far as Gowrie in Queensland, Albanese said in a statement.

He added that the inquiry will also examine the “appropriateness” of the government’s AUD 8.4bn equity investment to finance most of the new line’s construction. Albanese has questioned whether the government will get a return on its investment and also wants the line extended another 38km to the Port of Brisbane.

It is not clear whether the inquiry would delay the project, but Albanese said the inquiry would report back to the government no later than the end of 2019.

Hundreds of farmers along the route have complained the line will cut off access to parts of their property. On Tuesday, the NSW Farmers lobby group called on the government to match Labor’s plan.

 

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