The NSW government has ditched a search for a private partner for the planned Western Harbour Tunnel more than a year after it began, sparking fears that construction of the multibillion-dollar project will be further delayed.
The government faces a bill running into the millions of dollars to compensate three bidders who had vied to be the Sydney toll road project’s “development partner”, before recently learning the process had been canned.
The decision to quietly scrap the process is embarrassing for the state’s transport agency, which began a search in the middle of 2020 for a private sector partner and shortlisted three contenders last December.
An upgraded Warringah Freeway will be linked to the new Western Harbour Tunnel.Credit: James Brickwood
Three sources familiar with the situation, who sought anonymity, said the scrapping of the “development partner” process was likely to delay the start of major construction of the motorway tunnel from North Sydney to Rozelle by up to a year – a point refuted by Transport for NSW.
Shadow treasurer Daniel Mookhey said the Western Harbour Tunnel was “laughably behind schedule”, and the latest setback would delay the project at least another year and “massively hike” the construction bill for taxpayers.
“No one should expect this government to ever deliver a major project on time or on budget,” he said. “Contractors have learnt that it’s perilous to do business with Transport for NSW. They end up having to pay for the government’s incompetence.”
A parliamentary inquiry into the impact of the new tunnel and the proposed Beaches Link to Sydney’s north-east begins on Monday.
Transport for NSW said it expected a contract for the design and construction of the 6.5-kilometre tunnel to be awarded “late next year”, which will be just before the state election in March 2023.
“The decision not to proceed with a development partner has not contributed towards a delay to the [harbour tunnel] program,” it said.
Previously, it had planned to announce a private sector partner this year.
NSW shadow treasurer Daniel Mookhey says the harbour tunnel project is “laughably behind schedule”.Credit: Kate Geraghty
A spokeswoman for Transport Minister Andrew Constance said the government decided against proceeding with a development partner process after advice it would not be the best value for taxpayer money.
“There will be no delay to the start of major construction as a result,” she said. “Shortlisted bidders will be offered compensation.”
The government’s most recent timetable for the start of major construction of the tunnel has been sometime next year. That is later than original plans for it to begin in 2020-21, and open to motorists in 2025-26.
Part of the rationale for teaming up with a private sector partner had been that it would have cushioned the government from some project risk.
Transport for NSW shortlisted British construction company Laing O’Rourke, global engineering firm Bechtel and a consortium including Macquarie Capital last December.
Compensating the bidders for dumping the development partner process is expected to cost the government at least $3 million.
Meanwhile, CPB Contractors and Downer have been awarded a $1.18 billion contract to upgrade the Warringah Freeway, which will link one of Sydney’s busiest motorways to the Western Harbour Tunnel. Major work on the upgrade of four kilometres of the freeway on Sydney’s lower north shore is due to start early next year and take about five years to complete.
The Warringah Freeway and harbour tunnel will eventually be connected to the Beaches Link motorway to Balgowlah and Seaforth, which is likely to be completed two years later than first anticipated, in 2027-28.
The government has yet to reveal the estimated cost of the Western Harbour Tunnel, which will also act as a western bypass of the Sydney CBD by connecting the tolled tunnel to the $16.8 billion WestConnex motorway at Rozelle.
Leaked government documents in 2017 estimated the combined cost of building the harbour tunnel and the Beaches Link at $14 billion.
The Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.