Deloitte reports on toll funding component
Deloitte reports on toll funding component of Eastern Transport Corridor
The feasibility of using tolling as a source of funding for the Eastern Transport Corridor is the subject of a Deloitte Corporate Finance report released by the Eastern Transport Corridor Steering Group today.
Councillor Greg McKeown, Eastern Transport Corridor Steering Group chairman, says the Deloitte report is useful in providing a view on the level of contribution road tolling could make along the length of the corridor and will assist in making a recommendation on a preferred way forward for the project.
Internationally public private partnership arrangements do not involve all components of mixed transport modes. They do not seek to fund public transport which is publicly subsidised or land purchase as land remains in public hands.
The report concludes the construction of a toll road component of the Eastern Transport Corridor, with an estimated construction cost of around $1.2 billion, could be debt funded.
Tolling estimates exclude land costs estimated at approximately $900 million, exclude passenger transport related costs, and exclude ongoing road maintenance costs.
Deloitte presents an option that would include $1 to cross Panmure and Pakuranga bridges and a total trip cost of $2.90 per car for the entire length of the corridor. This would generate 45 per cent ($540 million) of the cost of constructing the toll road component. If the whole $1.2 billion cost was to be debt funded by tolls a total trip from Manukau CBD to Auckland CBD would cost $5.40.
Their scenarios are based on a 35 year concession to the toll road operator.
Consequently, toll revenue is unlikely to cover the full cost of purchasing land, building, operating and maintaining the full project as currently recommended. Deloitte says the total cost of the Eastern Transport Corridor is unlikely to be funded as a privately financed toll-funded public private partnership (PPP), as the annual subsidy required would be in the order of $250 million.
“As expected the report clearly indicates that tolls alone fall short of funding either of the options recommended by Opus to the steering group,” says Mr McKeown. “The steering group now have three major reports – Opus, Berl, and Deloitte. We plan to look at all three of these together in May, and then make recommendations to the Auckland and Manukau city councils and Transit New Zealand’s board.
“Decisions will revolve first around the form,
alignment and mode – what is proposed to be built where,
how, and for what modes of transport. In deciding that, the
steering group is going to have to grapple with issues of
scale, staging and as the Deloitte report highlights,
funding,” says Mr