One of Auckland's biggest projects - the $1.2 billion "central interceptor" wastewater tunnel - is a step closer with the announcement of four shortlisted contractors.

The central interceptor is being built by Watercare Services to reduce diluted sewage overflows into the Waitemata and Manukau Harbours by 80 per cent and provide for future growth.

Construction of the 13km tunnel from Western Springs and crossing Manukau Harbour under the seabed to the Mangere wastewater treatment plan is due to start next year for completion in 2025.

The 4.5m tunnel will be built at depths of up to 110m and connect to existing networks along the route.

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The shortlisted contractors are:

• CPB Contractors

• Ghella-Abergeldie Harker Joint Venture

• Pacific Networks, comprising McConnell Dowell, Fletcher Construction and Obayashi

• VINCI Joint Venture, comprising VINCI Construction Grands Projets, HEB Construction and Solentache Bachy.

Shayne Cunis, executive programme director for the central interceptor, said all four groups have demonstrated that they have the ability and experience to deliver this project to the required standard, while adding significant value to the project.

Design and technical documentation will be released this month, and the Request for Proposal will be issued to the shortlisted contractors in May.

Meanwhile, Auckland Council has announced a plan to issue green bonds for environmental projects like water infrastructure and public transport.

"We need to invest billions of dollars in Auckland's infrastructure over the coming decade. That includes focusing on projects which make Auckland greener and adapting to climate change. It makes sense to leverage the strong investor demand for green bonds to assist us with funding these projects," Mayor Phil Goff said.