Monday, 15th April, 2019

A new Penlink business case prepared for Auckland Transport suggests that construction could start in 2021 and finish around 2024-25.

Unlike the previous business case in 2013, it identifies a BOOT (Build, Own, Operate and Transfer) option, with transfer of the debt and project risk to a Special Purpose Vehicle (SPV) and a private sector credit agency.

The Benefit-Cost Ratio (BCR) for a 2-lane project is 12:1 and for a 4-lane is 7:1 – well above the high reward ranking of 5:1 i.e. a $5 return for every dollar invested.

A funding gap of $107m is identified if the project starts in 2021 and $171m if starts later as currently planned.

The business case assumes Penlink will be done by Auckland Transport and will be a 2-lane project, and kicked-off with Regional Fuel Tax (RFT) money $66m. It also states that because Auckland Council wouldn’t be able to cover the funding gap, money from NZTA/ Govt will be required if the project is done in a traditional way; i.e. isn’t a BOOT PPP with the debt covered by the SPV.

This business case is ammunition for the unsolicited bid by an international group to undertake the Penlink Toll Road Project as a BOOT that was lodged with the NZ Transport Agency (NZTA) last October – more than 6 months ago.

What’s the holdup?

The offer on NZTA’s table provides the majority of the estimated $400 million capital needed to build a 4-lane tolled Penlink road – including bridge over the Weiti River, rapid transit lane (busway), cycleway and possibly park-and-ride - recovering all revenue on an extended concession and transferring back to Auckland Council for free at the end of the concession.

At the heart of the bid is establishing a pathway for the joint venture to carry the financial risk associated with the design, build, ownership and maintenance of the toll road that avoids impact on Auckland Council’s tight balance sheet and bring forward completion by a decade.

“It’s action that is needed. This is what North Shore’s business and residential communities want – they are having to put up with traffic queues stretching up to 10km most mornings,” said Auckland Business Chamber head, Michael Barnett. “It could/should start tomorrow.”

 

For more information contact Michael Barnett on 0275 631150 or email: mbarnett@chamber.co.nz