Shortlist another milestone for Transmission Gully

Shortlist announcement another milestone for Transmission Gully

The NZ Transport Agency has today taken another step towards building Transmission Gully by announcing the two consortiums shortlisted to deliver the project.

Transmission Gully will provide a quicker, safer and more reliable route between the northern Wellington region, the Kapiti Coast and our capital city, bypassing many existing bottle necks and more hazardous stretches of State Highway 1.

The 27-km highway, which is a key part of the Wellington Northern Corridor Road of National Significance, will be an important connector for freight travelling between Wellington’s ports and the lower and central North Island. It will also give Wellington’s growing population a safer, less congested route for commuting between the northern Wellington region, the Kapiti Coast, and the capital city.

The two consortiums which have been selected to proceed to the next stage of the tendering process for the Transmission Gully project are made up of New Zealand-based and international organisations. Each consortium is made up of a construction firm working in partnership with road designers, investors and companies able to maintain and operate the road.

The following consortiums have been selected to proceed to the next stage of the tendering process:

Wellington Gateway Partnership
• Leighton Contractors Pty Ltd (lead)
• HEB Construction Ltd
• InfraRed Infrastructure General Partner Ltd
• The Bank of Tokyo–Mitsubishi UFJ, Ltd (BTMU)
• Accident Compensation Corporation (ACC)

Positive Connection
• John Laing Investments Ltd (lead)
• Fulton Hogan Ltd
• The Fletcher Construction Company Ltd
• Macquarie Group Holdings New Zealand Ltd
• Woodward Infrastructure Ltd as General Partner of Public Infrastructure Partners LP (PIP Fund)

NZTA Chief Executive Geoff Dangerfield said that announcing the shortlisted consortiums brought the agency one step closer towards delivering Transmission Gully.

“I’m confident that either of these consortiums could deliver a high quality road which will help people and freight move through the region quickly and safely, as well as offering a resilient, alternative access route into Wellington in the event of a disruption, said Mr Dangerfield.

He added that the announcement of the shortlisted consortium follows a rigorous evaluation and selection process.

“We are very fortunate to have such high quality companies and organisations showing an interest in Transmission Gully. All of these companies have sound experience in delivering large infrastructure projects.

In May, a request for proposal (RFP) will be issued to the two shortlisted consortiums, and NZTA is working towards announcing the successful bidder in early 2014.

The NZTA is proposing to use an availability and performance-based public private partnership (PPP) contract for the design, construction, operation and maintenance of the Transmission Gully highway. This is what the two shortlisted consortiums will bid on.

Mr Dangerfield said a key requirement for either consortium to be successful would be to demonstrate that their proposal would provide better value for money over the life of the road than could be achieved using traditional procurement models.

“PPPs can allow large, complex infrastructure projects to be built – and the benefits realised – in a shorter timeframe than is possible under traditional procurement methods, which require that funding be in place prior to construction beginning.

“Transmission Gully will provide a vital transport lifeline for the lower North Island, and it will be built. But the bottom line here is value for money, and the successful bidder will have to demonstrate clearly that New Zealand motorists and taxpayers will be better off than if the road were to be built with a traditional procurement and funding model.”

Under a PPP contract model, the successful bidder would put up the capital to design and construct the highway, and would then operate the publicly-owned road over a 25-year period. The consortium would recover the initial construction costs and ongoing financing and maintenance costs through regular, fixed payments from the NZTA.

Under the terms of the PPP contract, the successful consortium would only be paid when the road is open to traffic and specified performance levels have been met. Payments would be linked to the road’s performance, not to the volume of traffic using the road.

FREQUENTLY ASKED QUESTIONS

1. What does the shortlist mean in terms of progress towards building Transmission Gully?

These two consortiums will be bidding for the opportunity to finance, design and build Transmission Gully as well as to maintain and operate the highway for a period of 25 years.

2. What are the next steps?

A Request for Proposal document will be provided to the two shortlisted consortiums in May. They will respond to that RFP and we will select the successful consortium. We aim to award the contract and have construction underway late next year, with a safe and resilient road open for traffic in 2020.

3. What other organisations expressed an interest in the opportunity to finance, design, build maintain and operate Transmission Gully?

For reasons of commercial confidentiality we won’t be revealing who else was expressing interest. However, we can say that we were pleased with the number and quality of consortiums, which shows there is a healthy interest in PPPs in New Zealand.

4. How did you pick the shortlisted consortiums?

We went through a rigorous evaluation process to identify the two consortiums with the best capability, capacity, understanding and appetite to deliver the project in a manner that meets or exceeds the NZTA’s objectives.

5. How do you know the selected consortiums are sound?

We’ve carried out due diligence to independently verify their ability to deliver before making a decision on the shortlist.

6. How does the PPP for Transmission Gully differ to those used overseas which have experienced some challenges?

As a relatively late adopter of PPPs as a procurement option, New Zealand in general and NZTA in particular have the advantage of being able to learn from experiences in other parts of the world, improving on the best elements and avoiding the pitfalls.

As a result the proposed PPP for Transmission Gully is based on an ‘availability model’ which means that the successful consortium will only be paid when the road is open for customers to drive on. It is not dependent on tolling revenue or on the number of vehicles using the road.

7. Will you toll motorists to use Transmission Gully?

No decision has been made on tolling. We are currently investigating the advantages and disadvantages of tolling. If we decide to toll Transmission Gully, we will consult separately on this proposal with affected communities and stakeholders.

The PPP procurement model to be used for Transmission Gully does not depend on tolling. If the decision is made to toll, the revenue will be collected by the NZTA – not the consortium awarded the PPP contract.

ENDS

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