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Transmission Gully PPP brings innovative approach

Transmission Gully PPP brings innovative approach to transport infrastructure investment in NZ

Media Statement
29 July 2014

“After many decades of frustration, Wellingtonians can now look forward to a resilient and efficient roading connection to the rest of the North Island, due in large part to alternate financing arrangements which overcome institutional barriers to major transport investment,” says Stephen Selwood, CEO of the New Zealand Council for Infrastructure Development.

“The billion-dollar Transmission Gully mega-project is a vital link in the Wellington Northern Corridor Road of National Significance, providing a much more effective strategic connection between Wellington city and the territories north of Paekakariki. Employment centres, activities and, potentially, entire industries will be made possible by improved connectivity between the lower North Island’s population centres and Wellington’s central business district, port and airport.

“The new corridor will replace the fragile coastal segment of State Highway 1 north of Tawa which is vulnerable to both flooding and earthquakes, and will save many lives on what is currently one of the most hazardous stretches of road in the country.

“Despite the clear strategic merit of this project, Transmission Gully has been deferred for decades because of its comparative high cost. Conventional cost-benefit analysis does not adequately recognise regional growth potential, land use and other transformational benefits which lie at the very heart of Transmission Gully and the pay-as-you-go National Land Transport Fund is not geared for billion-dollar projects which consume such a disproportionate share of annual resources.

“The Government’s elevation of inter-regional investment through the RoNS initiative and NZTA’s expansion of transport evaluation to recognise the importance of strategic corridors like Transmission Gully both deserve commendation for overcoming the barrier posed by narrow economic analyses.

“The funding challenge was overcome by the first ever use of private finance in a New Zealand transport project.

“By employing a public-private partnership or PPP model, NZTA are able to leverage private capital to advance Transmission Gully as a single project. Not only does this enable the economic, safety and strategic benefits of the project to be brought forward, but the successful Leighton-led consortium have been able to demonstrate over the past year that efficiencies in project delivery and risk transfer away from tax payers has been sufficient to offset the cost of private debt.

“This is a significant innovation in transport infrastructure investment in New Zealand. It caps off a mixed week following the Environmental Protection Authority’s consent for Puhoi to Warkworth, but cancellation of approval for the Basin Flyover.

“Maybe it’s time to go to the market and seek innovative solutions to solving transport connectivity across, around or under the Basin Reserve in Wellington?” Selwood asks.

ends

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