RiverCity Motorway Group, owner and operator of Brisbane’s Clem Jones Tunnel (CLEM7), posted an AUD 1.67bn (USD 1.52bn) loss primarily due to an AUD 1.56M (USD 1.42M) impairment write down of the CLEM7, resulting in an intangible asset value of about AUD 250M (USD 227M).
The 6.8km tollway links five major Brisbane roads and includes twin, 2–lane 4.8km tunnels, bypassing the city’s central business district. Opening seven months ahead of schedule this March, the toll road has experienced traffic volumes well below the original forecast of 60,451 average daily trips one month after opening.
In May CLEM7 saw 21,424 average daily trips and during 1-29 August it saw the highest number yet with 27,908—though with tolls discounted by 50 per cent. Traffic growth is also well below what is required to meet the forecast of 100,284 average daily trips at the end of the 18 month ramp-up period.
RiverCity Chairman, Robert Morris, called the situation is serious and said, “current traffic will need to improve markedly over the coming months for the Group to be in a position to meet its ongoing financial obligations after its existing cash reserves are utilized.”
As of 30 June, the group had access to cash reserves of approximately AUD 127M (USD 1116M) after the drawn of AUD 30M in cash since opening. The balance of operational cash reserves as of 27 August was AUD 106M, having drawn down a further AUD 10.8M (USD 9.8M) and AUD 10M for July and August respectively.
Currently, precise reasons for the reduced traffic are unknown. In May, RiverCity appointed Integrated Management Information Systems to complete an assessment on traffic volumes in the tunnel, which is due at the end of the year.
Morris said the expected opening of the adjoining Airport Link tunnel in 2012 will significantly improve the traffic on CLEM7.
