Title: Australia North West Rail Link Project Deed

Language: English

Type: Document

Nature: Agreement

Published: March 8, 2021

Region: East Asia and Pacific

Country: Australia

Sector: Transportation

Keywords: Transport Core, Transport, Rail

Document Link(s):

Document Summary:

North West Rail Link – principal project deed (executed in late 2014) between Transport for NSW (a government agency responsible for regulating and managing Sydney’s transportation networks) and a private consortium (which includes the MTR Corporation, Leighton, Plenary Group and Marubeni) for the design, construction, operation and maintenance of a new rapid transit railway line running through Sydney’s north-western suburbs.  The agreement runs for a term of 15 years from the target date for completion (in 2019) and is structured on a BOT model.  The project usefully illustrates how the private sector can bring in innovative financing structures (the securitized license model) to fund the development of important public infrastructure.  It is also a useful example of how larger infrastructure projects may be partitioned between severally different private participants, with the host government playing the central coordination role.

Document Details:

Key features of the North West Rail Link - principal project deed:

  1. Approval – Transport for NSW is responsible for obtaining relevant planning approvals for the project. The operating company is responsible for obtaining and complying with all other required regulatory approvals.

  2. Land access – Transport for NSW has acquired the main sites required for the project and grants the operating company a license to use these sites for the project.

  3. Availability based payments – most of the operating company’s projects costs would be recovered through service payments during the operational phase. This is calculated based on availability of the railway system and subject to abatement for failure to meet various KPIs (e.g. timeliness, service quality, etc). Transport for NSW retains the revenue risk in respect of the infrastructure during the operational phase.

  4. Securitized license structure – finance for the project is partially raised through a securitized license structure. This effectively allows a separate financing company (stapled to the operating company) to provide indirect finance to Transport for NSW, which is then repaid out of the service payments under the project deed during the operational phase.

  5. Step in rights – Transport for NSW has rights to step in to carry out the project and operate the train system, in the event of a default by the operating company or during certain defined emergencies.

  6. Early termination payment – payable by Transport for NSW to the operating company in the event of early termination (other than where the operating company abandons the project). The amount payable varies depending on the ground for termination.

Transport for NSW is responsible for separately procuring the design and construction of certain key components of the railway line and associated systems (through separate contracts with other contractors). These works are to be handed over to the operating company, which is responsible for overall completion and testing of the railway system and ongoing operation.

Find more @ Public-Private Partnerships for Transport

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Updated: October 25, 2021