New $1.2bn blowout for NSW light-rail project

Spanish subcontractors are demanding an extra $1.2b to finish the project that’s ripped the heart out of Australia’s biggest city.

Light rail roadworks on the corner of George Street and Martin Place, where work is only half finished. Picture: Christian Gilles

Australia’s biggest light-rail ­project, from Sydney’s CBD to the eastern suburbs, is in disarray amid demands from its Spanish subcontractors for an extra $1.2 billion and NSW ­government accusations of a construction go-slow that could delay completion beyond next year.

The demand from ­Acciona — made through its lawyers and on top of a $500 million blowout ­already agreed to by the state government — threatens to more than double the original $1.6bn cost of the project linking the city to Randwick.

The latest demand sparked a furious response from NSW Transport Minister Andrew Constance and is headed for a showdown in the NSW Supreme Court next Friday. Acciona’s lawyers claim the government misled the contractor on how many utility lines would have to be moved ­during construction and the complexity of the work.

NSW Premier Gladys Berejiklian.

The NSW government is furious over reports Acciona has gone on a go-slow, with about 100 ­people working on the project each day when several hundred should be doing so. As many workers are being deployed daily on the 12km track as are being ­deployed on the 2.7km light-rail line being built in Newcastle.

State governments around the nation have embarked on a wave of urban transport projects, including the $11bn Melbourne Metro project, Brisbane’s $5.4bn Cross River Rail and Canberra’s light-rail line.

Government sources yesterday suggested the stoush could cause a delay in the project, particularly if the dispute sent the consortium building the line into administration. Work in the CBD has crippled traders on ­George Street and disrupted traffic to ­venues such as the SCG and Randwick racecourse.

For the week ending March 22, a progress report showed the project moved only 0.4 per cent forward. This compared with ­periods last year when 3 to 5 per cent of the project was being built each week.

Light-rail roadworks have closed major parts of the Sydney CBD. Picture: Christian Gilles

Only half the civil construction has been finished, several months after the total project was due to be completed.

The light rail is a signature project for NSW Premier Gladys ­Berejiklian, who announced it as transport minister.

The NSW government is also embarking on other major transport infrastructure projects, including the Sydney Metro North West, the Sydney Metro City and Southwest, and the Parramatta Light Rail.

Acciona, which reports to a private-sector consortium known as ALTRAC, sent a letter to Transport for NSW on February 22, warning of Supreme Court ­action over their demand.

The letter, ­obtained by The Weekend Australian, says: “In ­addition to the sum claimed in the commercial list statement by way of loss and damage, our client also maintains it is entitled to interest on the sum of $101m, bringing the total sum sought by our client to $1.206bn. We await your prompt response. Please note that if we have not received your client’s reply within 21 days of the date of this letter, we are instructed to finalise and file the Commercial List Statement and commence proceedings against TfNSW without further notice.”

In response, on March 22, Mr Constance wrote: “As I have previously advised you in our face-to-face meetings, the NSW government is very unhappy with your performance in relation to the construction of the Sydney Light Rail project.

“I have no doubt that Sydney’s residents and businesses are also incredibly frustrated. I recently described NSW as an unhappy customer — let me make it clear we’re now an angry customer.

A typical sight in the Sydney CBD. Picture: Christian Gilles

Construction of the network, which will feature 19 stops, extending 12kms from Circular Quay to Randwick.

“As you know, the Sydney Light Rail Project is being delivered under a public-private partnership model where Transport for NSW has contracted the ­ALTRAC Light Rail Partnership to build and operate the project.

“ALTRAC has in turn engaged Acciona to design and build the civil construction aspects of the project. Therefore there is no contract between Transport for NSW and Acciona, nor indeed between it and the state of NSW.”

Mr Constance said any issues Acciona had should be raised with ALTRAC. “You will also be aware that the contract between Transport for NSW and ALTRAC, and in turn the contract between ­ALTRAC and Acciona, spells out how the risks of dealing with utilities for the construction of the light rail are to be managed.

“Acciona negotiated and ­accepted these provisions and has since made use of them. I was therefore shocked and dismayed to be informed that Acciona … has threatened legal proceedings against Transport for NSW, based on allegations that Transport for NSW made misrepresentations to Acciona about the utilities in the lead-up to the signing of the contracts in December 2014. We have always said this is a complex project and both ­Acciona and ­ALTRAC knew this when they signed up.”

A spokeswoman for ALTRAC said last night: “The matter before the NSW Supreme Court does not involve ALTRAC Light Rail. It was filed by Acciona outside the contract and as such is for the parties involved to comment on.

“ALTRAC Light Rail is ­focused on construction of the city and southeast light rail and delivering this important piece of infrastructure for the NSW state government.”