The cost to the NSW government of paying a private consortium to operate Sydney's new light-rail line for 15 years has surged by 70 per cent, blowing out to almost $938 million.
In a further blow to the project, Transport for NSW has blamed the significant increase in the operating cost from its estimates before it was put to tender "in part on the more superior level of service than [was] originally anticipated".
The operating cost is separate from the $2.1 billion capital cost of building the 12-kilometre light-rail line from Circular Quay to Kensington and Randwick in the city's south-east and buying the trams that will run on it.
The latter blew out by $549 million in 2014 due to "mispricing and omissions" in the business case a year earlier – not "customer improvements in the original scope" as the government had claimed at the time.
An artist's impression of the light rail line on George Street in Sydney's CBD.
The latest revelations about the surge in the operating cost are mentioned briefly in the NSW Auditor-General's damning report into the project released less than two weeks ago.
While the government puts the blowout down to a "superior level of service", passengers will spend on average up to four minutes longer travelling from one end of the line to the other than was originally planned.
That is because the 60-metre trams are unlikely to gain priority over motorists at traffic lights, meaning they will spend longer sitting at intersections than hoped.
Labor's transport spokeswoman Jodi McKay said a near $1 billion increase in both the capital and operating costs of the light rail showed that the Baird government could not be trusted in delivering what it originally promised.
"They really need to spell out what has occurred that has led to this blowout. How can they get it so wrong?" she said.
"The Auditor-General's report clearly showed that they were playing with the truth."
Auditor-General Margaret Crawford noted in her report that the project's estimated benefits had dropped by 25 per cent to $3 billion in late 2014, from the $4 billion anticipated in the business case a year earlier.
Asked why the government had not revealed the spike in operating costs earlier, Transport for NSW said it was standard practice that projected operational costs for new infrastructure were "not announced but is accounted for in relevant budget planning".
The existing 12.8-kilometre inner west light-rail line from Central to Dulwich Hill has an annual operating cost of $34 million.
Transport for NSW said the cost of running the CBD and south-east light rail line would be higher "largely due to its significantly higher frequency of service and much larger fleet and workforce".
More than 520 services would operate on the new line each week day, compared with about 210 on the inner west light rail, it said. The new line would also have 60 trams, five times as many as the existing line.
A spokesman said the cost of operating the new line from the CBD to the south-east would be offset by the government's receipt of light-rail fare revenue, commercial revenue and the state's ownership of the asset.
"As with any piece of infrastructure, the costs of constructing the asset are kept separate from the ongoing operational costs," he said.
Passengers will use their Opal cards to pay for travel on the new line. Fares for it will be set in line with the distance-band system that already applies to the inner west light rail and both private and government buses in Sydney.
The ALTRAC consortium, which comprises Spanish company Acciona, France's Alstom, Transdev and financiers, has the contract to build the line and run it from 2019 to 2034.
The estimated operating cost of $62.5 million a year over the 15-year term of the contract with ALTRAC is based on nominal 2014 dollars.
The light-rail project has been plagued in recent months by the exit of senior managers charged with overseeing construction, hold-ups to the completion of final designs, and delays to sections of track along George Street in the central city and other stretches of the route in the eastern suburbs.