Climate woes prompts Transurban to axe $13.7bn US highway project

Transurban has junked its much-hyped express lanes project, blaming delays to environmental approvals and lawsuits plus a ‘changing political landscape’.

Transurban CEO Scott Charlton still sees positive growth potential in North America despite the termination of the Maryland express lanes project. Picture: Valeriu Campan

Toll road titan Transurban has junked its $US9bn ($13.7bn) Maryland express lanes project, blaming delays to environmental approvals and lawsuits plus a “changing political landscape”.

The $43.7bn ASX-listed company served the Maryland Department of Transportation with a notice to terminate on Friday, following “extensive good faith negotiations”.

It comes as environmental concerns are putting the handbrake on significant projects. Viva Energy this week said its gas import terminal at Geelong had faced another setback after the Andrews Labor government requested more details to approve the project.

Meanwhile, the Welsh government has halted or amended dozens of new road projects, citing a “climate and nature emergency”.

Transurban’s axed Maryland project was set to involve high occupancy toll lanes, totalling 60 kilometres of highway, connecting North Virginia with key business and residential areas in Maryland.

It was expected to be one of the largest public private partnerships in the US, easing one of the region‘s worst congestion points, the American Legion Bridge.

The estimated cost of the American Legion Bridge I-270 to I-70 Relief Plan was $US3-4bn, with the overall Maryland express lanes project expected to cost more than $US9bn. Transurban owned 60 per cent of the project’s consortium, Accelerate Maryland Partners, with Macquarie capital owning the remaining 40 per cent.

In a statement to the ASX, Transurban said extensive work has been undertaken on the project and draft concession agreement in partnership with Maryland Department of Transportation (MDOT).

“However, the project continues to face challenges including significant delays to

environmental approvals, changing political landscape and environmental lawsuits that remain unresolved,” Transurban said.

“Following extensive good faith negotiations by AM Partners, agreement with MDOT on the form of the concession agreement has not been reached and a committed section proposal will not be submitted by the deadline of March 21, 2023.”

The company said terminating the project enabled “operating cash and corporate liquidity to be used for other purposes”. FY23 distribution guidance remains at 57c per security.

The Maryland express lanes project abandonment comes 18 months after a dramatic vote that split the state’s Board of Public Works, which voted 2 to allow Transurban to complete pre-development works.

Then Maryland treasurer Nancy Kopp, opposed the project, aimed at relieving traffic congestion, on environment concerns and lack of information around its financial risks.

Ms Kopp voted against the project after the state denied her office $US100,000 to seek external legal and financial advice, and she was concerned highways would worsen climate change.

But former Maryland governor Larry Hogan disagreed, saying the project was a “win for families, commuters and small businesses”.

“It will finally begin to solve the soul crushing, worst-in-the-nation traffic that people have failed to address for 50 years,” Mr Hogan said at the time.

“This project has the support of the overwhelming majority of Marylanders, and was recently advanced by the regional Transportation Planning Board. Here in Maryland, we continue to set an example for Washington and the rest of the nation when it comes to infrastructure.”

On Friday, Transurban’s outgoing chief executive Scott Charlton said: “We continue to see positive growth potential in North America and the greater Washington area (GWA), with regional fundamentals including high levels of congestion and a growing population”.

“Our current projects in GWA include the Fredericksburg extension project on the 95 express Lanes and the Northern Extension project on the 495 express lanes.

“We remain disciplined in the pursuit of all opportunities, balancing growth in distributions and investment to create long-term value.”