Money in operating tunnels: BrisConnections about to go bust

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Ho Really
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Money in operating tunnels: BrisConnections about to go bust

#1 Post by Ho Really » Tue Nov 13, 2012 10:08 am

Airport Link operators driven to the ground as $4.8 billion asset worth less than it owes
ROBYN IRONSIDE From: The Courier-Mail November 13, 2012 1:00AM

Image
Comparison of forecast and actual tunnel traffic of major tunnel projects in Brisbane, Sydney and Melbourne.
Source: The Courier-Mail


BRISBANE'S Airport Link tunnel - the nation's biggest infrastructure project - could soon go bust after its owners yesterday admitted the $4.8 billion asset was worth less than it owes.

Less than four months after the opening of the tunnel, BrisConnections yesterday announced it had entered "formal negotiations with lenders and other key stakeholders" to discuss their options.

"Taking into account ... present traffic levels and operating costs, the enterprise value may be less than outstanding debt," read a statement posted on the Australian Stock Exchange. "As previously advised, BrisConnections is reviewing cost and revenue options and has retained advisers to undertake a review of likely traffic levels in the light of current information."

A spokeswoman for Treasurer Tim Nicholls said the Newman Government had not been approached for a bailout and it would be "inappropriate to comment" on whether one would be considered.

The tunnel will remain open to motorists despite the financial crisis.

BrisConnections initially forecast Airport Link would carry 136,000 vehicles a day by the end of the three-month, toll-free period.

Instead, traffic volumes plunged to an average 53,172 vehicles a day when a discounted toll of $2.50 was applied from October 18. The rapid downfall of the project follows the failure of Rivercity Motorway's Clem7 Tunnel which went into receivership 10 months after opening with debts of $1.3 billion.

Despite the toll road failures, Brisbane City Council is pressing ahead with the $1.7 billion Legacy Way due to open in early 2015.

Forecast to carry annual operating losses of almost $100 million, the project is largely funded by ratepayers with the Federal Government contributing $500 million. Lord Mayor Graham Quirk said he was confident about the traffic forecasts for Legacy Way which were much more conservative than those prepared for Airport Link and the Clem7.

"(We're forecasting) about 24,000 vehicles a day on opening in 2015," Cr Quirk said. "While (BrisConnections') traffic forecasts were ambitious, there were about 65,000 vehicles a day during October using Airport Link to help reduce traffic congestion across the city and the infrastructure will be there for many, many decades to come."

Since opening in late July, Airport Link has had a dramatic effect on surface roads including Lutwyche, Albion and Sandgate roads.

Paul Turner from peak motoring body RACQ said the tunnels were a positive addition to northside Brisbane's road network. "We've now got considerably less traffic on surface roads, and one of the best runs from the northside to the airport," Mr Turner said.

"Unfortunately the traffic volumes that were projected in the (BrisConnections') prospectus were always extremely ambitious. We always thought it was extremely unlikely Airport Link would carry more vehicles than the Gateway bridges in its first few months."

The Australian
So much for putting money into holes...

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AG
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Re: Money in operating tunnels: BrisConnections about to go

#2 Post by AG » Tue Nov 13, 2012 5:41 pm

If appropriate corridors and planning systems were in place several decades ago we wouldn't be requiring all these road tunnels.

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Re: Money in operating tunnels: BrisConnections about to go

#3 Post by claybro » Tue Nov 13, 2012 6:30 pm

So whats the worst that can happen? Bris connections (or whoever they are) go bust, and some super funds lose 0.001% of their money. These are not real companies employing thousands of people. They exist to shuffle money from the government to private enterprise and back again.The money raised employs thousands of fabricators, builders, designers, labourers ETC. At worst, when the dust settles in 20 or so years, Brisbane will have some much needed infastructure, allowing the city to function more efficiently, which would not have been the case without the shonky financing arrangement. With all of this negative pulicity though, dont expect to see a toll tunnel in Adelaide ever.

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Re: Money in operating tunnels: BrisConnections about to go

#4 Post by crawf » Thu Nov 15, 2012 2:28 am

AG wrote:If appropriate corridors and planning systems were in place several decades ago we wouldn't be requiring all these road tunnels.
And this is where Adelaide has done mostly well, excluding one particular road.

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Re: Money in operating tunnels: BrisConnections about to go

#5 Post by Aidan » Thu Nov 15, 2012 4:55 pm

AG wrote:If appropriate corridors and planning systems were in place several decades ago we wouldn't be requiring all these road tunnels.
But who's to say what corridors and planning systems are appropriate? How well do you think we could predict mid 21st century requirements several decades ago? And should we have allowed suburbs to be blighted by roads that may never be built?

Urban road tunnels aren't just a way of correcting past mistakes. They offer significant local environmental advantages over surface and elevated roads.
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Re: Money in operating tunnels: BrisConnections about to go

#6 Post by Aidan » Thu Nov 15, 2012 5:19 pm

claybro wrote:With all of this negative pulicity though, dont expect to see a toll tunnel in Adelaide ever.
Ever? Or just until demand improves and the tunnels become profitable for their new owners?

Not all tunnels have been financial failures - indeed it was the success of Melbourne's Citylink that started the toll tunnel trend. Nor do toll tunnels have to be privately owned.
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