16 Mar 2010
Clayton Utz advises Victorian Government on innovative Peninsula Link deal
A first of its kind in the Australian road sector, Peninsula Link is being delivered as an Availability PPP, and was the first project to be delivered under the new Victorian Major Transport Projects Facilitation Act.
Clayton Utz continues to be at the forefront of key infrastructure activity in Australia. A Clayton Utz team led by Melbourne-based Major Projects Partners Marko Misko, Naomi Kelly and Dan Fitts provided strategic legal and commercial advice to the Victorian Government on the recently closed Peninsula Link Project.
Peninsula Link is a 27 km freeway standard road including 11 local road connections and more than 35 bridges which will cut travel times between Mount Martha and Carrum Downs to just 17 minutes. The Victorian Government awarded the contract to deliver the project to the Southern Way Consortium comprising Abigroup, Bilfinger Berger and the Royal Bank of Scotland.
A first of its kind in the Australian road sector, Peninsula Link is being delivered as an Availability PPP. The Southern Way Consortium will finance, design, build, operate and maintain the road for the agreed project term of 25 years, in exchange for the payment of an availability charge (by the Victorian Government) rather than tolls (paid by users). Availability charge model PPPs are well established in the social infrastructure sector, however road PPP projects in Australia have traditionally required the private sector to assume patronage risk.
The Peninsula Link Project was delivered in record time – nine months from the Expression of Interest phase to Contract Close. This was achieved by utilising innovative tendering processes and highly streamlined contractual project documentation developed by Clayton Utz, working closely with the Victorian Government's Linking Melbourne Authority. As a result, significant time efficiencies were gained and project bid costs for both the Victorian Government and private sector bidders were minimised.
The project also achieved fully committed debt and equity funding notwithstanding the financial market constraints at the time. The final project documentation included significant developments in the market position for State financial support in relation to refinancing and market disruption risk, most recently established on the Victorian Desalination Project, returning much closer to pre-GFC positions on many issues.
The Peninsula Link Project was the first project to be delivered under the new Victorian Major Transport Projects Facilitation Act - the legislative regime introduced to facilitate the Victorian Government's $38 billion Transport Plan. Clayton Utz provided all statutory advice relating to the planning, approvals and project delivery aspects of this new legislation.
The Peninsula Link Project reached Financial Close on 8 February and the Southern Way Consortium has begun construction of the project.
The Clayton Utz team was delighted to have advised the Victorian Government on this cutting-edge project which represents the next generation of road sector PPPs and incorporates the valuable lessons learnt from previous similar projects over the last decade.
Clayton Utz has been advising State Governments on all aspects of road PPP projects for over 15 years, including in Victoria the Melbourne City Link, East Link, M1 Corridor Upgrade, and Peninsula Link, in NSW the Sydney Cross City Tunnel, Westlink M7, Lane Cove Tunnel and M2 Expansion, and in Queensland the Airport Link, Northern Link and the CLEM7 Tunnel. More recently, Clayton Utz' Major Projects national head, Doug Jones has joined the board of Roads Australia, Australia’s peak national body for stakeholders in the road transport sector.