Two groups forming for North East Link

11 April 2019 - 12:00 am UTC

Two bid groups are so far forming for the upcoming AUD 7bn to 9bn (USD 5bn to 6.5bn) North East Link (NE Link) motorway PPP, but the size of the deal and the troubles of some major contractors may prevent more from entering.

Several sources eyeing the project said one group is likely to form around construction contractors Samsung, Fluor and CIMIC’s CBP Contractors and a second involving Acciona and John Holland.

Macquarie Capital and MUFG were bidding for an advisory role with the first group. Sources close said Macquarie Capital had won the mandate. 

Plenary and Capella Capital are said to be bidding for the financial sponsor role with the Acciona and John Holland group, the sources said.

Those intending to lodge an EOI were required to submit a “respondent member form” by 1 April, listing consortium members including project sponsor and the D&C contractor.

Expressions of interest on the availability PPP are due by 10 May, request for proposals are due to be issued in the third quarter and the bid deadline is slated for the first quarter of 2020.

Construction on the full project, worth AUD 15.8bn, is due to start next year and take seven years to complete.

On 2 April, the government announced it had shortlisted CPB Contractors and Laing O’Rourke for a AUD 200m works package to deliver power, water and other utility works. 

It released the Environmental Effects Statement on 10 April.

When it called for expressions of interest in November last year, the government made an unusual move to ban Lendlease, CIMIC’s CPB Contractors and John Holland from working together on the PPP bids.

This was aimed at enticing more overseas construction companies to tool up in Australia for a major project, thereby helping to create greater competition for this and other projects.

Samsung and Fluor’s presence appears to signal that is working, but, apart from subsidiary Capella, Lendlease itself has since said it is shying away from major PPPs while it seeks to sell its troubled engineering and services division.

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 sector would fund the up to AUD 5bn cost of building the motorway from financial close until expected completion in 2027. 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 tunnels, and will cover maintaining and operating 11km of new motorways along with the existing Eastern Freeway between Hoddle Street and Springvale Road that will connect to the NE Link.

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.

Spokespeople at CIMIC, Samsung, Fluor, Acciona and John Holland. Spokespeople at Capella, Plenary and Macquarie declined to comment.

 

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