Labor wins elections in Victoria and East West Link to be canceled

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Labor wins elections in Victoria and East West Link to be canceled

After winning the elections, the Labor party in Victoria has announced that they will continue with their plans to cancel the PPP contract for the East West Link project.

Tony Abbott, Prime Minister of Australia, had announced plans to withdraw A$3billion in federal funding for Victoria if the new state government tears up the contract for the East West Link project. Mr Abbott is trying that Labor premier, Daniel Andrews, rethinks his opposition to the project. Mr Abbott stated:

"I do hope that the incoming premier of Victoria does reconsider his misguided commitment to tear up the East West Link contract … because it is pretty clear that the people of Victoria do want the East West Link,"

"We are only too happy to continue to deliver A$3 billion to the government of Victoria, provided it goes ahead with building the East West Link that it is contractually obligated to build."

Daniel Andrews commented:

"We had a discussion about some important matters. He invited me to break my commitment to the Victorian people around East West Link and I indicated to him in a very respectful way that I would not be doing that."

According to sources, the state Treasury had estimated that A$1.1 billion would be the cost of breaking the project contract by March 2015. The bill would cover costs already incurred by East West Connect, which is the selected bidder for the project, and lost profits over the 25-year life of the contract.

The East West Connect consortium is composed by: Capella CapitalLend Lease EngineeringAcciona Infrastructure AustraliaBouygues Travaux PublicsLend Lease ServicesLend Lease Infrastructure Investments, John Laing, Queensland Investment Corporation (QIC), and Bouygues Construction Australia.

The East West Link project is a 18-kilometre cross city connection north of the Melbourne central business district. The full East West Link will improve the connectivity between Melbourne's established east and rapidly growing west, joining the Eastern Freeway at Hoddle Street with the Western Ring Road in Sunshine West. This first stage of the project involves a new freeway-standard road link, including twin 4.4 km three-lane tunnels, connecting Melbourne's Eastern Freeway with the CityLink motorway.

The project includes finance, design, construct, operate and maintain East West Link. The project is a 30 year concession, involving a construction period of approximately five years and 25 years of operations.

The project cost is estimated at A$6 billion (US$5.56 billion). The East West Link project will be delivered as an availability public private partnership (PPP) with the state initially retaining tolling and traffic risk.

The project was scheduled to be operational by 2019 - 2020.

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