Victoria kicks off biggest-ever rail project

13 June 2019 - 12:00 am UTC

Australia’s Victoria state is seeking feedback from the private sector for its Suburban Rail Loop project, Premier Daniel Andrews announced today.

Potential bidders can now register their interest in the 90km mega project, Andrew said at the AFR National Infrastructure Summit in Melbourne.

“We know that this is the first big engagement with the market on this project and there are none bigger – this will be many billions of dollars and it will take decades to finish in total, but it is the sort of pipeline that the infrastructure industry has been calling for,” he said.

KPMG was last month appointed financial advisor to the government, while a tie-up between Aurecon, Jacobs and Mott MacDonald was named technical advisors.

“Suburban Rail Loop is a project that will fundamentally change the way that people get around our city and will fundamentally change the way our city works.” Andrews said, adding that the loop will connect “every major rail line from Weribbee all the way around to Frankston, in the west to the southeast,”

Work is already progressing, with planning, business case development, design, engineering well underway. Andrews said he expects construction to begin by 2022. 

Varied interest
Victoria received more than 100 applications from companies interested in the western section of the loop, a rail line connecting central Melbourne with the city’s main airport at Tullamarine.

“I was a little surprised with the depth and the spread of interest of onshore and potential partners from overseas. The same approach will be taken with the Suburban Rail Loop,” Andrews said. 

The entire loop will comprise 12 new stations and link all of Melbourne’s existing rail lines, boosting capacity by 400,000 trips per day. The full project is not expected to be completed until the 2050s.

Restrictions will apply to local contractors wishing to bid for Suburban Rail Loop in a similar vein to those that were introduced in the tender for the AUD 15.8bn Northeast Link, Andrews confirmed.

Cimic, John Holland
Australia’s largest contractors, including Cimic and John Holland, will be barred from bidding together and will instead be encouraged to partner with overseas contractors, in an effort to widen the competitive field.

Andrews said that contractors will be required to locally source a minimum of 50% of the materials needed for the project, in line with rules for other major projects tendered in the state. 

“There are very few, if any multinational companies, that would walk into the Victorian market without seeking a local partner. We do have some international players working for us now, and we welcome more of them,” Andrews added.

Skills shortage
New South Wales Transport Minister Andrew Constance said he is concerned about a skills shortage in the construction sector but noted that his state “does not have local content rules which can tie [contractors] in knots.”

Constance supported the public-private partnership model used to finance the troubled CBD to Southeast Light Rail Project, which will now cost AUD 2.9bn – nearly double its estimated price tag – because the government spent AUD 400m settling a legal dispute with project company ALTRAC. 

“It is critical that the confidence in PPPs remain strong as it is an important delivery method and the temptation of bureaucracy to step into other delivery models will only drive up risk,” Constance told the conference. 

Asset recycling
He urged the federal government to restore its Asset Recycling Programme which gave NSW an incentive to offload its power networks and ports and use the proceeds to pay for new infrastructure, including the light rail. Former federal treasurer Joe Hockey devised the scheme in 2015, but it was shuttered two years later before the grants had been fully deployed.

“It is important that the federal government continue asset recycling. Imagine what would happen if Queensland had moved on its poles and wires,” Constance said, referring to the state’s aborted plan to privatise several of its infrastructure assets including electricity transmission and distribution.

Constance said “mobility pricing” would replace road user charging as a means to raise money for the transport projects of the future. 

“You are going to be subscribing to a service for transport like Netflix. You sign up for a nominal fee each month and all the different pricing for public and public providers is built into it – whether it be an Uber, a ride share or on-demand transport like a Metro.”

 

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