Victoria terminates East-West link deal

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Victoria terminates East-West link deal

East West Connect consortium has reached an agreement with the Victorian Government in the form of a non-binding Heads of Agreement providing a resolution for the East West Link project.

The agreement enables the Victorian Government to acquire the project companies for a nominal consideration. The agreement also enables the sponsors of the project companies to cease work on the East West Link project and to be kept whole for fees and costs that have been incurred.

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.

According to Premier Daniel Andrews, the government will pay the consortium A$339 million to move away from the project. The toll road to link the Eastern Freeway and CityLink will cost an additional A$81 million but Mr. Andrews added that that funds will finance its proposed Melbourne Metro rail tunnel.

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

The total project investment was estimated at A$6 billion (US$5.56 billion).

East West Connect consortium reached financial close on the East West Link Project in October 2014. Following the November 2014 election in Victoria, the Government directed the construction joint venture group to suspend work on the East West Link project.

In Late November 2014 we reported that Labor party in Victoria, Australia, was threatening with canceling the PPP contract for the East West Link project. At that time the Treasury estimated that A$1.1 billion would be the cost of breaking the project contract by March 2015. After winning the elections, the Labor party in Victoria finally announced that they will continue with their plans to cancel East West Link project.

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