The $710 million Puhoi to Warkworth highway project faces rising costs and delays due to Covid-19.

It follows news last month the country's largest construction project - the $4.4 billion City Rail Link in Auckland - is facing extra costs and delays from the impact of Covid.

City Rail Link Ltd has said the impact will not be known until the end of the year once a "red pencil" is run over the figures.

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Waka Kotahi New Zealand Transport Agency said the Covid-19 pandemic and level 4 lockdown may impact the completion date of October next year and the overall project cost for the Puhoi to Warkworth highway.

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The agency said it was in discussions with the Northern Express Group (NX2), its partner in the project, and will be making no further comment until the discussions are concluded.

The City Rail Link is also facing cost pressures. Photo / Greg Bowker
The City Rail Link is also facing cost pressures. Photo / Greg Bowker

On Wednesday, the agency said a toll on the new section of SH1 is up for public consultation. The proposed toll is $2.40 for cars and $4.80 for heavy vehicles.

Construction on the 18.5km Puhoi to Warkworth highway began in 2016 and was due for completion in October next year.

The transport agency awarded a Public Private Partnership (PPP) contract to the Northern Express Group (NX2) to build the highway and then operate and maintain it for 25 years.

By 2026, it is projected the new highway and old SH1 route will cater for 35,000 vehicles a day and shave off 10 minutes on the drive from Auckland to Warkworth.

The Puhoi to Warkworth project is another bump on the road for the agency after Wellington's $1 billion Transmission Gully highway encountered cost overruns and the completion date was pushed out from November until next year. It, too, is a PPP project.

This month, the agency said parts of the 27km road will need to be removed and done again.

Meanwhile, business groups have welcomed the Government's decision to put Auckland's $6b light rail project on hold.

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A decision on light rail in Auckland has been put on hold by the Government. Image / Supplied
A decision on light rail in Auckland has been put on hold by the Government. Image / Supplied

Light rail was promised by Labour from the CBD to the airport and the CBD to West Auckland in 10 years. Prime Minister Jacinda Ardern promised in 2017 to build light rail to Mt Roskill within four years.

The project has chopped and changed with no clear directive from the Government about its objective and no decision on who will build it - the transport agency or a partnership of the NZ Super Fund and a Canadian pension fund, known as NZ Infra.

Transport Minister Phil Twyford's office has confirmed that a funding decision for modern-day trams was "on pause at the moment".

Covid19.govt.nz: The Government's official Covid-19 advisory website

Heart of the City chief executive Vic Beck said disruption in the CBD from building light rail now would be "appalling" for business and retailers trying to get back on their feet.

She welcomed the pause, but said it still leaves a lot of unanswered questions, including how to handle disruption to business during construction, financial assistance, who would be accountable, plus the massive impact on the economy brought by Covid.

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"A pause should be an opportunity to take stock and reflect on these various things so we get the right access solution for the future," Beck said.

Construction progress on the new Puhoi to Warkworth highway. Photo / Jason Oxenham
Construction progress on the new Puhoi to Warkworth highway. Photo / Jason Oxenham

Dominion Road Business Association manager Gary Holmes welcomed the news light rail is on hold for the time being, saying not having disruption to business would be great.

"But it still raises the question of what next? If it is going to be abandoned then what is the mass transit solution for Dominion Rd?" he said.

He said Covid-19 was having a big impact on Dominion Rd, well-known for its mostly Asian food outlets and small businesses.

There were 21 empty shops along Dominion Rd today, he said, but only a couple of restaurants, a couple of hairdressers/beauty shops and one souvenir shop that appear to have closed down permanently since lockdown.

Holmes said the biggest closure was The Dominion bar and restaurant on the corner of Dominion and Valley Rds but that happened pre-Covid.

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A NZ Infra spokesman said it understood and accepted the Government is focused on responding to the Covid crisis and expected it would consider the matter in due course.

An analysis of bids from NZ Infra and Waka Kotahi has been considered by the Ministry of Transport, but the winner has yet to be decided.

"We've been in touch with the Ministry of Transport who confirm the preferred delivery partner will be considered by cabinet once it has the bandwidth to do so.

"We remain committed to Auckland light rail. It has the potential to both transform how Aucklanders get around their city and contribute to the country's economic recovery. Given the size of the project, the preparatory phase alone requires significant resources," the spokesman said.