Slump in tollway traffic hits stock

ALMOST $230 million was wiped off the share value of toll road operator ConnectEast yesterday after its Melbourne Eastlink road became the latest tollway to fall drastically short of its traffic projections.

ALMOST $230 million was wiped off the share value of toll road operator ConnectEast yesterday after its Melbourne Eastlink road became the latest tollway to fall drastically short of its traffic projections.

Eastlink traffic figures released yesterday showed patronage of Melbourne's newly opened toll road halved in the first week of motorists being charged.

This follows the financial woes of Sydney's Cross City Tunnel, which was placed in receivership last year and sold to new owners, and Lane Cove Tunnel, whose operator has run up $1.1billion in debt as traffic volumes run at barely half its forecasts.

ConnectEast shares yesterday plunged 24 per cent to a record low of 76.5c before closing last night at 85c, down 14.5c.

Analysts said the main causes of financial troubles for toll road operators were optimistic projected traffic flow figures submitted to win government tenders, and the resultant failure to meet targets.

Eastlink's figures show an average of 133,722 vehicles a day used the Mitcham-Frankston tollway in the first week in which motorists were charged, compared with 270,868 a day during the 39km road's month-long toll-free period.

The statistics revealed Eastlink was taking $414,036 a day on average in tolls, the average trip length on the road was 12.62km and the busiest part of the tollway was Springvale Road to the Ringwood Bypass.

ConnectEast defended the performance of the $2.5 billion tollway, saying it was difficult to draw conclusions from one week's data.

Victorian Roads Minister Tim Pallas said traffic patterns and volumes would take several months to be established.

The Victorian Opposition described the "massive" drop in patronage as a snub by motorists to the Brumby Government.

Austock Securities analyst Andrew Chambers said infrastructure companies kept making the same mistakes when it came to projected traffic numbers.

"When you have competitive bids for the tender process, the winner of the bid always has the most optimistic traffic forecast," he said. "And we have seen that fail numerous times over the years, like the recent Cross City Tunnel in Sydney."

Mr Chambers said it was not a complete shock Eastlink had fallen short of its targets because the company used the same traffic forecaster as the operator of the Cross City Tunnel.

"We have a number of toll roads struggle, but the same mistakes keep being made," he said. "Based on the first week of data, they (ConnectEast) are likely to miss their prospective revenue forecast by 25 per cent."

The Land Cove Tunnel was predicted to carry 100,000 vehicles a day when the original contract was signed with the NSW government. The actual weekday traffic for July was 53,853 vehicles.

Connector Motorways, which operates the Lane Cove Tunnel, said yesterday it had handed a "recapitalisation plan" to its financial backer.

Victorian Opposition transport spokesman Terry Mulder raised the prospect of the Government blocking the surrounding roads to funnel more motorists on to the Eastlink tollway.

"It (the toll road) has come at a time when we have very high petrol prices and high interest rates and people are seeking to use public transport," Mr Mulder said. "And ConnectEast aren't the only ones who are suffering; this has also happened in toll roads of other states."

A Government spokeswoman said it was contrary to Victorian Labor Party policy to change traffic conditions to force motorists onto toll roads. The Iemma Government did that in Sydney, and suffered a strong backlash from drivers.

The contract for the Melbourne road runs until 2043. ConnectEast spokesman James Tonkin said: "We are at the very start of our ramp-up phase and it will take some time for motorists to factor EastLink into their everyday travel patterns."

Additional reporting: AAP