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Twyford's choice: NZTA or Super Fund for Auckland light rail

By Paul McBeth

Aug. 22 (BusinessDesk) - Transport Minister Phil Twyford will decide early next year whether to use traditional government procurement to build a light rail network in Auckland, or bypass those processes with a New Zealand Superannuation Fund joint venture.

The New Zealand Transport Agency had been running a procurement process during the past year to consider possible options when the NZ Super Fund and Canadian fund manager CDPQ Infra lobbed in an unsolicited bid to build and operate two lines in the proposed Auckland rail project.

Twyford today said he will choose between NZ Infra, the NZ Super Fund-CDPQ joint venture, and a traditional NZTA-led procurement with a decision to be made early next year.

"Both of these options for delivering light rail are credible, but neither are fully developed, and we need to understand the long-term implications," Twyford said in a statement. "That step is critical for the government if we are to make the right decision on how best to deliver light rail for Auckland."

NZ Infra's proposals, which would include co-designing the asset with the government, haven't been done in New Zealand before. The majority of financing and risk would sit with the two pension funds.

NZTA is assessing a range of procurement, financing and delivering models, including alliances and public-private partnerships.

"There are significant differences in how the two options would be financed and delivered," Twyford said.

The Ministry of Transport will manage the process and ensure Auckland Council and Auckland Transport are closely involved in the work over the coming months.

The ministry will work with NZTA and NZ Infra during the next four to six months to refine proposals for the city centre-to-Mangere line.

NZTA said it had made good progress with its indicative business case, but will now take part in the new process. In its March quarterly report, the agency said market engagement had been put off to let the government consider Transport Ministry and Treasury advice on alternative funding, operating models and delivery.

The transport agency said work on the city centre-to-Northwest line was at a very early stage and needed more work to develop a business case.

The light rail project involves tram-like carriages running on dedicated rail lines, often down the middle of existing roads. The government is proposing two routes initially - the first between the city and the airport along Dominion Road, and the second between the CBD and Kumeu northwest of the city, following state highway 16.

The Auckland Transport plan puts the light rail project among an $8.4 billion spend during the next decade to develop repaid transport, including busways and rail.

The city-to-airport light rail component identified the need for "a substantial increase in public transport capacity and efficiency" to avoid eroding Auckland's productivity with increased travel times and freeing up access to employment areas. The northwest line was considered more expensive than a busway but also seen as a longer-term solution to bus congestion in the city centre that would also support stronger land-use change.

Light rail had already attracted $1.8 billion of seed investment in the government and Auckland Council's 10-year transport plan for the city, because of the "potential opportunities for leveraging funding and financing arrangements" to progress the work, the 2018 report said.

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