New South Wales treasurer Dominic Perrottet has announced a scoping study that will explore a potential sale of the state government’s remaining 49 percent stake in the WestConnex toll road project.
A consortium led by Australian Securities Exchange-listed Transurban paid A$9.86 billion ($6.5 billion; €5.8 billion) for a 51 percent stake in Sydney Motorway Corporation, the entity developing and building the project, in August 2018, and has first refusal on the remaining stake.
The A$16.8 billion WestConnex scheme is the largest road project in Australia and will comprise 33 kilometres of interconnected toll roads and tunnels once complete.
It has been undertaken in three sections: the expansion of the M4 motorway in tunnels, which is 100 percent complete; duplicating part of the M5 motorway, which is around 85 percent complete; and the construction of new tunnels linking the M4 and M5 motorways, which is around 60 percent complete.
The NSW Government used some of the proceeds from the original stake sale to fund the ongoing construction of the M4-M5 link.
The concession to operate WestConnex once complete runs until 2060, after which it will return to state government hands. The sale of the remaining stake in the project will not affect that timeline. Construction is due for completion in 2024.
The consortium comprises Transurban (25.5 percent), AustralianSuper (20.5 percent), the Canada Pension Plan Investment Board (20.5 percent) and Tawreed Investments (9 percent).
It beat a group led by IFM Investors and has first refusal on the remaining stake. A market source told Infrastructure Investor that the consortium was the likely front runner for the sale as a result, but that pressures from coronavirus on traffic numbers and a dispute with contractors on Transurban’s under-construction West Gate Tunnel project in Melbourne, could put pressure on the listed firm’s ability to commit the required capital to a bid.
NSW Treasury will now appoint advisers to carry out the scoping study with a report due to be submitted to the department by mid-2020.
Perrottet said that proceeds from the stake sale, should it go ahead, would be used to fund future infrastructure projects in a continuation of the state’s asset recycling programme. It launched a scoping study into the sale of the softwood division of Forestry Corporation of NSW last year but had to abandon that last month following damage to the assets from bushfires.
“The scoping study will look at all the available options and will only proceed if there is clear evidence that doing so would be in the best interest of the people of NSW,” he said in a statement.
“The government’s successful asset recycling strategy has seen NSW’s net worth grow from A$165.9 billion in 2011 to more than A$250.2 billion today – making NSW the first state with a quarter-trillion-dollar balance sheet.
“The state’s asset base continues to increase with the state’s physical assets estimated to have a value of A$355.9 billion as at 30 June 2019, an increase of A$16.1 billion from 30 June 2018.”
