Low driver patronage and wrangling over tolls and local road closures has led to the collapse of Cross City Tunnel Motorway, the concessionaire operating Sydney’s Cross City toll tunnel.
Insolvency specialist KordaMentha has been appointed receiver and manager of the tunnel. Deutsche Bank and Westpac Banking Corporation called in the firm on behalf of a syndicate of 16 domestic and international banks owed US$439M from the project.
Cross City Tunnel Motorway is 50% owned by Hong Kong’s Cheung Kong Infrastructure. Other shareholders include Bilfinger Berger and public-service superannuation funds. The company has a 35-year concession to build and operate the tunnel.
The 2.1km long toll tunnel opened in August 2005 but traffic volumes have been about a third of forecast levels of 90,000 vehicles a day. Drivers initially boycotted the tunnel because of the high tolls, and there was a public outcry over about 70 road closures that forced vehicles to use the tunnel.
The closures were included in the concession agreement with the New South Wales state government, which had to backtrack and reopen many closed roads (T&TI, December 2005, p12). The government may face claims from the tunnel company for re-opening the roads.
Australian toll road operator Transurban Group and Macquarie Bank have already been tipped as possible buyers for the tunnel. The government said the tunnel could be temporarily managed by the state until a buyer is found.
