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Project Finance
1. Introduction
This report is to discuss and figure out the reasons behind the failure of the infamous project Lane Cove Tunnel. The project costs around $1.1 billion for a 3.5km long twin tunnel which run underneath the Epping Road, and will connect the M2 motorway from North Ryde to the Gore Hill Freeway at Atarmon (Connector, 2010). The tunnel started to build in 2004 and it started operating in 2007. The tunnel was set to allow a shorter transportation time between City and Northwestern suburbs. It also represents a local benefit by reducing the overall noise and air pollution whilst reducing the traffic on Epping Road (Connector, 2010). The Connector Motorways was the original owner and operator for the tunnel; however it was sold to Transurban in May 2010 for $630 million after the tunnel underperforming for several years. 2. Project Overview
The Lane Cove Tunnel has a structure of public private partnership (PPP). This form of finance involved both public and private sector worked as a joint venture to develop a large infrastructure project (Thia, 2009). The origin of Connector Motorways was the Lane Cove Tunnel Consortium which consists of Thesis Pty Ltd, John Holland Pty Ltd, ABN AMRO Ltd, Transfield Services Limited and Transfield Holding Ltd. The consortium won the project contract from the state government which was then in charge of the design, construction, funding and operation for the Lane Cove Tunnel. 3. Project Structure
The Lane Cove Tunnel project was in charge by the Lane Cove Tunnel Consortium which consists of several companies which have different role in the project. The consortium comprises of Thiess Pty Ltd, John Holland Pty Ltd, ABN AMRO Pty Ltd, Transfield Services Limited and Transfield Holding Pty Ltd.
ABN AMRO Pty Ltd acted as a sponsor, financial adviser, bond underwriter and major equity participant (Roadtraffic-technology, 2010). As the sole financial advisor, it developed the capital structure of the consortium (ABN


References: 1. ABN AMRO Pty Ltd 2006, “Inquiry into Cross City Tunnel – Lane Cove Tunnel: Submission” 2. Colquhoun T., Accessed on 2/Jan/2011, “Commuter chaos to go on after tunnel collapse”.http://www.smh.com.au/articles/2005/11/02/1130823240833.html?from=rss 3. Connector Motorways Pty Ltd, Accessed on 30/Dec/2010, “Lane Cove Tunnel”, http://www.connectormotorways.com.au/tunnel.htm 4. Goldberg, J. L. 2006, “The Fatal Flaw in the Financing of Private Road Infrastructure in Australia”, University of Sydney. 5. John Holland Pty Ltd, Accessed online on 30/Dec/2010, “Lane Cove Tunnel, NSW”, http://www.johnholland.com.au/Project.asp?Action=Project&PID=4 6. Pau, L.Y., 2009, “Catalogue of Notable Tunnel Failure Case Histories”, Civil Engineering and Development Department HKSAR. 7. Phllips G., 2007, “Analysis of Sydney Public-Private Partnership Road Tunnels” ASOR National Conference. 8. Roadtraffic-technology.com, Accessed on 30/Dec/2010, “Lane Cove Tunnel, Sydney, Australia”, http://www.roadtraffic-technology.com/projects/lane_cove/ 9. Thia, H., April 2009, “Delivery of Economic Benefits using Public Private Partnerships in the Development of Infrastructure Projects”, International Review of Business Research Papers. 10. Wikipedia, Assessed on 30/Dec/2010, “Lane Cove Tunnel”, http://en.wikipedia.org/wiki/Lane_Cove_Tunnel
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