NZTA to seek first partner for Northland Expressway in the New Year

Minister of Transport Simeon Brown onsite at the SH1 Brynderwyn Hills rebuild. NZTA will seek a partner for the first of three back-to-back PPPs to build a four-lane expressway in Northland, next year. Photo / NZME

By RNZ

New Zealand Transport Agency / Waka Kotahi (NZTA) will seek a partner for the first of three back-to-back PPPs to extend State Highway One in four lanes through to Whangārei in the New Year.

A PPP is a public-private partnership that builds then operates the highway for two-to-three decades.

Transport officials told a scrutiny committee at Parliament on Thursday they would seek a PPP partner for the first of the three Northland highway sections next year.

It would be for the Warkworth to Te Hana section of the 100km road.

A new model for procuring highways was being worked on at the government’s direction.

“That’s sort of driven us to the model that we’re coming up with, which is in essence looking at three PPPs back-to-back,” said general manager of transport services Brett Gliddon.

“Which gives us, you know, if you think about that staged way, more competition, more innovation and we get to learn as we go so it’s not one big thing that could end up having problems,” NZTA Waka Kotahi chair Simon Bridges told the MPs.

Committee chair Andy Foster asked about an “utterly extraordinary” forecast cost being put on the whole highway by another government agency. Foster did not name the agency, or specify the cost, and the officials would only say the cost was “significant”.

The highway was in the “first wave” of the government’s Roads of National Significance, Bridges said.

The route beyond Te Hana was still being worked out and consenting would follow.

The three PPPs would likely combine a big international contractor with a strong balance sheet, along with local contractors.

“It would be great to see a mix of international, local, iwi in the PPP going forward,” Bridges said.

The fast-tacking legislation might affect how quickly the last two sections were consented, MPs were told.

The three Northland sections, as well as all other new highways, were being assessed for tolling to recover costs. NZTA would recommend one way or the other on tolls, but “Cabinet decides,” said Bridges.

The annual PPP fee paid by the Crown to the contractor-operator alliance at the Pūhoi-to-Warkworth initial section of the northern highway is about $100m a year, according to internal documents.

A warning about the project’s costs and acceleration from the top infrastructure watchdog was revealed in September.

The Infrastructure Commission Te Waihanga told Infrastructure Minister Chris Bishop in July the highway could swallow one tenth of all non-maintenance/renewal investment across the entire public sector - health, schools, courts, etc- for the next 25 years.

It was common for project costs like this to rise by half or even double, it said.

“Overall affordability constraints and the need for careful project selection will not be solved by financing tools, including PPP,” Bishop, NZTA and the Transport ministry were warned, in the short paper from the commission and released under the OIA to lobby group Aotearoa 350.

Meanwhile, seeking a commitment to build it before a detailed study was done, and “amid scarce funding” was “high risk and inconsistent with good practice”.