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A weekly analysis updating you on the latest developments in the infrastructure sector.
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In this edition
Sydney Metro briefing wrap - Metro West base case delivery strategy announced
South Australia releases forward pipeline at industry briefing
Shortlist announced for Waterloo Station and Metro Quarter development
Federal Government introduces energy market misconduct legislation
NSW Government announces plans for fast rail network
Industry News
Appointments
Policy Taskforces and Events
TRANSPORT
Sydney Metro Briefing wrap - Metro West
base case delivery strategy released
On Thursday, Transport for NSW held an industry briefing for
the Sydney Metro programme. The briefing provided an update
on the progress of Sydney Metro Northwest, City and
Southwest, and West, while also providing greater detail on
Sydney Metro Western Sydney Airport (previously North South
Rail Link). TfNSW also released the base case delivery strategy
for Sydney Metro West and updated procurement timelines for
the remaining City and Southwest contracts at the briefing.
Source: Sydney Metro For Sydney Metro West, the proposed tunnelling contracts are now
intended to be more evenly split in size. The rolling stock and
signalling and train control elements of the project are expected to be
procured as separate contracts to the rail and line-wide systems and
depot contract. The preferred delivery strategy and procurement start
dates are expected to be finalised in 2019.
In the briefing, Sydney Metro and TfNSW confirmed that they will maintain a flexible approach to project delivery,
acknowledging the scale of the upcoming pipeline in NSW and Australia.
Sydney Metro West
Figure 1 shows the base case delivery strategy for Sydney Metro West. The base case is not a definitive delivery
strategy. Rather, Sydney Metro states it ‘reflects the current level of project definition’ and allows for ‘future
optimisation as the project is further defined’. Industry were consulted on an initial delivery strategy for Sydney
Metro West, which factored in the following changes to the newly released base case:
tunnelling for Sydney Metro West will be done through ‘at least two’ tunnelling contracts, with the proposed
West and East tunnel excavation contracts to be now more evenly split in size. The contract split will
depend on the selection of an intermediate retrieval site between the T1 Northern Line Link and The Bays
Precinct stations
station excavations within the tunnels are proposed to be done through incentivised target cost (ITC)
arrangements, while the tunnels are proposed to be fixed-price design and construct arrangements
rolling stock, signalling and train control elements of the project are now proposed to be procured
separately to the rail and line-wide systems and depot
stations in the Parramatta and Sydney CBDs are likely to be procured as integrated station developments
(ISD), while non-CBD stations will be procured as station-only contracts, and
the operations contract now includes maintenance and is proposed to include an initial five or six-year
contract, with potential for another five to seven-year term.
Figure 1: Sydney Metro West base case delivery strategy
Source: Sydney Metro Importantly, Sydney Metro notes that several contracting options, including the use of a Public Private Partnership, have been carried forward for further consideration. The initial delivery strategy for the line-wide rail systems, rolling stock and depot contract had listed an option for use of private finance. Industry engagement will continue as the final business case for the project is developed. Sydney Metro stated their current focus is on finalising the tunnelling strategy, including the potential use of PPP for delivery. Procurement of the project is expected to begin in 2019, with the tunnel contracts the first major contracts to enter the formal procurement phase. Sydney Metro City and Southwest The industry briefing also gave an update on procurement and delivery of Sydney Metro City and Southwest. Updated procurement timelines for the remaining contracts are shown in Figure 2. Key updates include:
the Crows Nest Station detailed design work is being procured now, while a ‘separate contract will be
released for the station construction in early-2020’, and
the Southwest Stations and Corridor package will now be procured through multiple contracts.
Figure 2: Sydney Metro City & Southwest updated procurement timeline
Source: Sydney Metro
Sydney Metro Western Sydney Airport
Sydney Metro Western Sydney Airport, formerly North South Rail Link, has been brought under Sydney Metro by
TfNSW. The first stage of the new line will connect from St Marys Station to Western Sydney Airport and the
Western Sydney Aerotropolis. Both Federal and NSW governments have a stated aim of delivering SMWSA in
time for the opening of WSA in 2026.
SMWSA is now in the strategic assessment phase, with Sydney Metro conducting industry and stakeholder
engagement. The engagement seeks to shape the project on issues such as:
station locations, including interchange opportunities
land use and precinct planning along the project corridor
identifying any synergies between the project and Sydney Metro West, and
packaging procurement and delivery.
Further information on the SMWSA and the wider Sydney Metro programme will be updated on
infrastructurepipeline.org as it is made available.
Relevant links
Read the December 2018 Industry Briefing
View the December 2018 Industry Briefing presentation
View the Sydney Metro programme on infrastructurepipeline.org
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FUNDING
South Australia releases forward
pipeline at industry briefing
This week, the South Australian Government held an industry
briefing on its planned infrastructure capital investment
programme out to 2022. The Government has committed $5.4
billion to transport and social infrastructure over the next four
years.
As part of the industry briefing, the SA Government released its
Forward Work Plan, which provides planning, design, procurement,
Source: Shutterstock
and construction timelines for projects, and their current status.
Across the transport and social infrastructure sectors, investment is
targeted at freight, transport network optimisation, integrated public
transport, as well as community and government infrastructure. By
value, projects range from small scale projects under $4 million to
major projects in excess of $300 million.
The industry briefing provided information on the Government’s strategy for delivering the $5.4 billion capital
investment pipeline. As shown in Figure 3 below, the pipeline includes:
$2.3 billion for transport projects such as roads and bridges
$2.1 billion for buildings, which largely comprises health, education and correctional facilities, and
$1 billion for public transport.
Figure 3: SA’s infrastructure capital investment programme to 2022
Source: SA Department of Planning,Transport and Infrastructure
The Industry Briefing also provided updates on several major projects. The North South Corridor Regency Road
to Pym Street will be delivered via an Alliance model, with Expressions of Interest to be called this month. The
$200 million Joy Baluch AM Bridge Duplication will also be delivered through an Alliance, with EOIs to be called
in the first quarter of 2019.
The delivery model of the $305 million Main South Road Duplication was not confirmed, but it is expected EOIs
for major works will be called for in the second quarter of 2019. The $276 million Queen Elizabeth Hospital
Redevelopment Stage 3 will also issue EOIs for major works in the second quarter of 2019.
Relevant links
Read the Forward Work Plan
Read the Industry Briefing Summary
View the projects on infrastructurepipeline.org
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TRANSPORT
Shortlist announced for Waterloo Station
and Metro Quarter development
This week, the shortlist for Waterloo Station and Metro Quarter
Integrated Station Development in Sydney was announced. The
two shortlisted proponents are John Holland and Waterloo MQ
(Aqualand). The new Waterloo Station is expected to open in
2024, in line with operations commencing on the Sydney Metro
– City and Southwest project.
The shortlisting of John Holland and Waterloo MQ follows the call for
Registrations of Interest in July 2018. The shortlisted proponents will
Source: UrbanGrowth NSW Development
Corporation now move to the Request for Tender phase of procurement.
The integrated station development will occur in the Waterloo and Metro Quarter, bounded by Botany Road,
Cope Street, Raglan Street and Wellington Street. The development is expected to include:
a new underground metro station
700 residential dwelling, including 70 social housing units
4,000 square metres of retail space, and
9,000 square metres of commercial space, including 2,000 square metres for community use.
Figure 4: Artist impression of the Waterloo Station and Metro Quarter development
Source: UrbanGrowth NSW Development Corporation
The shortlisting of proponents also follows the release of a concept State Significant Development Application
and the Environmental Impact Statement for the project in November. Both documents are on public exhibition
until 30 January 2019.
The detailed State Significant Development Application will be completed by the development partner once
selected.
The project is part of the broader Sydney Metro – City and Southwest project, which will run from Chatswood,
through the city, and out to Bankstown. The metro line is expected to be operational in 2024.
Relevant links
Read Sydney Metro’s media release
View the Waterloo and Metro Quarter Integrated Station Development on infrastructurepipeline.org
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ENERGY
Federal Government introduces energy
market misconduct legislation
This week, the Federal Government introduced legislation to
define and address prohibited misconduct in the energy market.
A key element of the legislation would make forced divestiture
of energy assets a possibility, which has raised significant
sovereign risk concerns among energy market participants.
The Treasury Laws Amendment (Prohibiting Energy Market
Misconduct) Bill 2018 seeks to amend the Competition and
Consumer Act 2010. The legislation will not reach the Senate until
Source: Shutterstock next year when Parliament sits for three weeks prior to the election in
May 2019. However, the Senate has also voted to send the
legislation to a Senate Inquiry, which will report in March 2019.
The legislation follows the Australian Competition and Consumer Commission’s Retail Electricity Pricing Inquiry,
which was released earlier this year. Significantly, the Inquiry did not recommend the forced divestiture laws.
The legislation defines prohibited misconduct as:
energy retailers failing to pass through electricity supply chain cost savings to consumers
energy companies withholding hedge contracts thereby lowering competition, and
electricity generators manipulating the spot market by withholding supply.
The ACCC will determine whether prohibited misconduct has occurred and consider the following available
actions:
the issuing of warning and infringement notices
court-ordered civil penalties up to the maximum value of either $10 million, three times the value of the
total benefit attributable to the conduct or 10 per cent of the annual turnover of the corporation in the 12
months before the conduct occurred
Contracting Orders that permit the Treasurer to require electricity companies to offer financial contracts to
third parties, or
Divestiture Orders relating to misconduct in the wholesale market.
The proposed Divestiture Orders, which were not recommended by the ACCC’s Retail Electricity Pricing
Inquiry, have been met with significant concern from industry. Energy market participants have stated the threat
of intervention of this nature is likely to discourage investment and increase the cost of capital for those who do
invest, which would ultimately place upward pressure on consumer electricity prices. The creation of divestment
powers has been explicitly rejected by past competition policy reviews including the review led by Professor Ian
Harper under former Prime Minister Tony Abbott and Fred Hilmer’s inquiry in the 1990s.
The Divestiture Orders have been changed from their original drafting after review by the ACCC. Under these
changes to the legislation, the Treasurer would no longer have sole power to compel energy companies to divest
generation assets. Instead, upon recommendation by the ACCC, the Treasurer would be able to apply to the
Federal Court to seek an order directing an energy company to divest assets. The legislation will apply to both
privately owned and government owned enterprises.
The Bill also includes a provision which would allow the Australian Energy Regulator to make legislative
instruments without being subject to parliamentary disallowance or judicial review except in a narrow set of
circumstances. Industry has expressed concern that this would allow the AER to regulate power prices without
scrutiny.
The proposed laws would expire in 2025 under a sunset clause, with the legislation to be reviewed in 2024.
Relevant links
Read the Federal Government’s media release
Read the legislation
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TRANSPORT
NSW Government announces plans for a
fast rail network
This week, the NSW Government announced that a Fast Rail
Network Strategy would be developed next year, if they are re-
elected at the March 2019 state election. The Strategy will
investigate faster rail across four potential routes, within 300
kilometres of Sydney.
The strategy would first consider how the Government could
‘optimise’ current tracks to get travel speeds to at least 200
kilometres per hour in the ‘short to medium-term’. It will also consider
Source: Shutterstock
how to build a dedicated fast rail line that could travel at speeds of
between 250 and 350 kilometres per hour in the ‘medium to long-
term’. The Fast Rail Network Strategy will also examine funding
options for the projects.
The four routes identified by the NSW Government are:
Northern Route including the Central Coast, Newcastle, Taree and Port Macquarie
Southern Inland Route including Goulburn and Canberra
Western Route including Lithgow, Bathurst and Orange / Parkes, and
Southern Coastal Route including Wollongong and Nowra.
Professor Andrew McNaughton will Chair a panel developing the Fast Rail Network Strategy. The NSW
Government’s preliminary time saving estimates show that ‘fast rail’ could reduce travel times by up to 75 per
cent.
The NSW Government has stated that the Fast Rail Network Strategy would be developed next year, if they are
re-elected at the March 2019 state election.
Relevant linksRead the NSW Government’s media release
Read the Fast Rail information page
BACK TO TOP
Industry news
Downer has been awarded an $80 million contract by Queensland Rail to upgrade 22 trains. Under the
contract, Downer will design, supply, install and commission the trains. The project will start this month and be
completed by 2023.
The Victorian Government has awarded three road services contracts to Downer, Fulton
Hogan and Sprayline Road Services. Under the $183 million programme, 224 kilometres of suburban roads
and highways will be repaired and resurfaced. Works on the programme will start this month.
Terrain Solar’s sale of the Warwick Solar Farm to the University of Queensland has reached financial close
following the project receiving grid connection approvals. Lendlease will provide the engineering, procurement,
construction and operation and maintenance services to the project. Construction on the Warwick Solar Farm is
expected to start in early 2019. PwC was the financial, commercial, legal, and tax advisor to Terrain Solar for
the sale.
Palisade, through the Palisade’s Renewable Energy Fund, has announced the refinancing of the Waterloo
Wind Farm. The 11.5-year, $140 million refinancing is underwritten by MUFG Bank.
The Queensland Government has announced that it will establish an Investment Facilitation and Partnerships
Group within the Department of State Development, Manufacturing Infrastructure, and Planning. The stated
aim of the Group is to create a single function to ‘oversee the assessment and recommendations for private
business case proposals’. Policy and programme areas such as market-led proposals, the Advance Queensland
Industry Attraction Fund, project facilitation, and the Jobs and Regional Growth Fund will come under the
auspices of the IFPG.
Jacobs has been awarded a three-year outline agreement from Woodside Energy to provide engineering and
procurement services for the Karratha Gas Plant in WA. The Karratha Gas Plant is part of the broader North
West Shelf Project.
SNC-Lavalin and Australian Future Energy have signed a pre-feasibility study agreement for the development
of AFE’s $1 billion Gladstone Energy and Ammonia Project in Queensland. In the first phase of the three-phase
agreement, SNC-Lavalin will produce a pre-feasibility report detailing engineering process packages for civil,
mechanical and electrical works, environmental assessment, as well as project capital and operating costs.
AECOM and Oriental Consultants Global have signed a Memorandum of Understanding to collaborate on
projects in Asia, including the broader Asia-Pacific. Under the MoU, the companies will collaborate on social,
environmental and transit infrastructure projects across the region.
The Australian Energy Market Operator has released the South Australian Electricity
Report. The report notes that, amongst other measures, the proposed interconnector between SA and
NSW would provide increased energy supply security and potentially enable cost reductions in energy prices.The Federal Government has released the June 2018 Quarterly Update of Australia’s National Greenhouse
Gas Inventory. The report indicates that emissions grew 0.6 per cent in the year to June 2018 on the back
of higher than expected levels of Liquified Natural Gas production.
The Australian Energy Regulator has released the 2018 Annual Benchmarking Report. The report highlights
that electricity distributors have improved productivity by more than two per cent over the past two years, while
productivity in transmission networks has improved by 2.8 per cent over the past two years.
BACK TO TOP
Appointments
Greg Combet AM will become Chair of IFM Investors’ Board on 1 January 2019.
Mr Combet was previously a Minister in the Rudd and Gillard governments.
AMP Capital will appoint Bevan Graham as New Zealand Managing Director and Chief
Economist, effective 1 January 2019, replacing Grant Hassell. Mr Hassell will become AMP
Capital’s Global Head of Fixed Income and remain on the Board of AMP Capital NZ.
Former Infrastructure Partnerships Australia Advisory Board Member, Peter Hicks, has been
appointed as the new Chief Executive Officer of Moorebank Intermodal Company. Mr Hicks is
also a Director of Anglicare and the former Chief Financial Officer of Leighton Contractors.
Francesco De Ferrari has now commenced as Chief Executive Officer of AMP, replacing
interim Chief Executive Officer, Mike Wilkins. Mr De Ferrari will also join the AMP Board as an
Director at the first board meeting of 2019.
Separately, AMP will appoint Alex Wade as Group Executive and Advisor, effective 7 January
2019. Mr Wade was most recently the Head of Developed and Emerging Asia for Credit
Suisse Private Banking.
Geoff Tomlinson and Dod Wales have been re-elected to the Board of Calibre as
Directors. Mr Tomlinson and Mr Wales were re-elected at Calibre’s Annual General
Meeting last Friday.
Brisbane Airport has appointed Jabine van der Meijs and Brad Geatches as Non-Executive
Directors on its Board. Ms van der Mejis is also the Executive Vice President and CFO of
Royal Schiphol Group and Mr Geatches is the CEO of MATES in Construction.
Former Infrastructure Partnerships Australia Executive Director, Policy and Strategy, Jonathan Kennedy, has
been appointed as the Sector Leader for Transportation, Logistics and Infrastructure for the New JerseyEconomic Development Authority.
Lisa Samways has been appointed Arcadis’ Client and Sales Executive Director. Ms
Samways was previously Arcadis’ Business Leader for National Buildings Design in Australia.
Perpetual has announced two appointments to the Executive Leadership Team. Richard
McCarthy has been promoted to Group Executive, Perpetual Corporate
Trust, while Sam Mosse will join Perpetual in February 2019 as Chief Risk Officer.
DLA Piper has announced changes to its International Executive Team, effective 1 January
2019. This follows the re-election of Simon Levine as International Managing Partner for a
second term. Read the full list of appointees.
The Federal Government has announced six new appointments to the Fair Work Commission.
Tony Saunders, Nicholas Lake, Gerard Boyce, Bryce Cross, Amanda Mansini and
Janine Young have been appointed Deputy Presidents, and Leyla Yilmaz has been
appointed as a Commissioner.
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