Wellington Scoop

Transmission Gully – big profits to be made

transmission gully
NZ Transport Agency

Who’ll be making big profits from the $1billion Transmission Gully project? The answer – mainly overseas investors.

Yesterday’s official announcement provides details of where the money is coming from. Four main sources are named. The first three are included in the Wellington Gateway Partnership, the entity which has signed an agreement with the Transport Agency to build the motorway:

The Bank of Tokyo-Mitsubishi UFJ, Ltd – it describes itself as a global leader in project financing. Japan’s largest bank and one of the world’s largest, with offices throughout Japan and in 40 other countries. BTMU is co-sponsor and financial advisor within the Gateway group.

InfraRed Capital Partners Limited – describes itself as a leading global investment manager focused on infrastructure and real estate, creating real value for its investors, project partners, communities and end users. It manages US$7billion of equity capital in specialist funds that invest into infrastructure and real estate assets which InfraRed develops and operates across the globe. It has invested in over 50 development projects with capital expenditure of c. US$25billion. It has offices in London, Hong Kong, New York, Paris and Sydney.

The Accident Compensation Corporation – yes, one local investor. Yesterday’s announcement says ACC is an equity and debt partner in the Wellington Gateway Partnership. “Its interests are fully aligned with WGP in ensuring that the new highway will be built on time and to the highest quality and standard of safety… it maintains one of NZ’s largest investment funds in order to cover the full future costs of all accepted personal injury claims.”

The fourth source of finance is the Australian owned Bank of New Zealand. It isn’t included in the Gateway group, but its announcement yesterday said: “As lead bank to successful bidder, Wellington Gateway Partnership, BNZ has provided 20% of the senior bank debt facility which will be used to construct the motorway.”

The DomPost details how the private investors will be rewarded for their big spend. Michael Forbes reports:

Once the motorway is open to traffic in April 2020, the Transport Agency will begin paying it off, along with interest, maintenance and operating costs in annual instalments of $125m over 25 years. That means by the time inflation has been added into the mix, taxpayers will have handed over about $3.1billion.

With such a huge total to be paid out, it seems obvious that Transmission Gully will be a toll road. But the Transport Agency is in denial. Chief executive Geoff Dangerfield says a decision will happen “within the next year or two.” A decision favouring tolls would seem to be a safe bet. This is the same organisation that five years ago denied it was planning a flyover at the Basin Reserve, when planning was in fact being pushed ahead with a fervour which lasted till the board of inquiry said no.

No isn’t a word that’s being used for Transmission Gully any more. Work on the four lane 27km motorway from Linden to Mackays Crossing should begin before the end of the year. With the Gateway partnership – led by the Australian-owned Leighton Contractors Ptd Ltd – promising to open the new road in 2020.