Bus and Tram Express
Bus and Tram Express

The Australian: Premier’s team short by $600m on light rail costs

May 24, 2018News Uncategorized

In The Australian by Andrew Clennell 

Gladys Berejiklian’s then department was informed in mid-2014 that the cost of ripping up and ­moving powerlines in George Street for the Sydney light rail project was as high as $700 million — but factored in just $100m when the now NSW Premier ­announced months later that the project would cost $2.1 billion.

The Australian has been told that Ausgrid employees seconded to Transport for NSW in mid-2014 realised the immense cost of removing and replacing utilities to build the project. They suggested the light rail be moved to Elizabeth Street, where the cost of replacing utilities would not be as high, saying a budget of $700m for replacing the powerlines would be needed if the project went ahead in George Street.

Yet the tenderers for the project were not informed of the costs associated with moving the powerlines, sources say.

And the cost was not factored into the $2.1bn price tag — which had already been increased by the then transport minister Ms Berejiklian from an original $1.6bn when she announced in December 2014 that Acciona’s consortium, ALTRAC, would deliver the project.

Negotiations between Ausgrid and Transport for NSW over the cost of the utilities broke down in 2014, amid suggestions Ausgrid was “gold plating” in its estimates.

Acciona is now suing the state government for $1.2bn for cost blowouts largely associated with what it claims was misleading or deceptive conduct in relation to the amount of work required to refit George Street.

In 2015, after the state election, Acciona put to the government a claim for $430m to do the George Street powerline replacement work, after, it says, it was misled about the true extent of the Ausgrid replacement work.

But sources have told The Australian Acciona was convinced to take its claim off the table and negotiate. It is understood Ausgrid employees who were seconded to Transport for NSW to work through the project in 2014 will be subpoenaed to give evidence if the case goes to a full hearing.

Both the government and ­Acciona were said to be back “at the table” this week as the government sought to bring to an end the dispute before a Supreme Court hearing.

Ms Berejiklian’s office declined to comment last night and referred the matter to Transport for NSW. During 2014, Tim Reardon was secretary of Transport for NSW. Ms Berejiklian has since appointed Mr Reardon as the head of the Department of Premier and Cabinet.

In a statement of claim lodged by Acciona last month, the firm alleged that the NSW government negotiated a contract with it while withholding information about underground electricity infrastructure that would vastly blow out costs.

It said that by February 27, 2015 — a month before the state election — Acciona and other companies in the ALTRAC consortium signed financing agreements for the project. The company has alleged that in the hours after 5pm that day, Ausgrid emailed it a document that ­detailed how it wanted its utilities dealt with during construction.

Dated October 2014, the document was vastly different and more expensive than what ­Acc­iona agreed to for at least 106 utilities. A further 927 utilities were “unclear” and may also be much more expensive, the company claimed in court last month.

The matter is due before the court again tomorrow.

Read the full story here.