The Government is welcoming “strong interest” from the NZ Super Fund, which has proposed forming an international consortium to design, build and operate Auckland’s light rail network.
But Minister of Transport Phil Twyford says the Government has not accepted the offer as the light rail contract is open to a procurement process that will solicit interest from other potential bidders.
Twyford and Finance Minister Grant Robertson officially launched the procurement process for the project on Wednesday morning. Twyford estimates the project will cost about $6 billion, making it the biggest transport project in New Zealand history. He says the Government hopes land value capture will provide one of the revenue streams to fund the project.
In a statement, Twyford says the light rail project will be a “magnet for private investment.”
“The New Zealand Transport Agency (NZTA) will now set up a robust process to explore a range of possible procurement, financing and project delivery options,” Robertson says.
This process will invite and assess all potential proposals and report back to the Ministers of Finance and Transport.
Robertson says NZTA will work with the Treasury and the Ministry of Transport in this process.
The procurement process covers both the city to Mangere and the city to North West lines. The recently announced 10-year transport plan for Auckland earmarked $1.8 billion in seed funding with the option of securing private investment in the network.
Twyford says the Government received an unsolicited proposal from the NZ Super Fund last month.
“The Government will not be commenting further on the proposal other than to say that we welcome the strong interest in light rail and acknowledge that any investors will require a reasonable commercial return.
“The procurement process agreed by Cabinet will review all other proposals in the same way as the Super Fund’s proposal is assessed,” he says.
Speaking to media, Robertson says both he and Twyford are expecting some “significant interest” from other potential investors.
But the pair have no preferences as to whether or not a partner is New Zealand-based.
“We’re not going to express any preference about that today, we want to make sure we do a project here that delivers for Aucklanders what they need and provides value for money to New Zealanders.”
An “attractive prospect for investment”
In a statement, NZ Super Fund Acting CEO Matt Whineray says the wealth fund considers Auckland light rail to be a project of sufficient scale to be an “attractive prospect for investment.”
“We wish to explore whether a NZ Super Fund-led consortium leveraging our international relationships can fund and deliver the project, on a fully commercial basis.”
Whineray says the Fund has identified Canadian based CDPQ Infra – one of the country’s leading institutional fund managers with a US$238 billion war chest – as a potential partner for the project.
Currently, around 2% of the $38 billion NZ Super Fund is invested in infrastructure globally. It has around $5 billion invested in New Zealand.
Twyford has always said the Auckland light rail project would be funded partly through private investors.
A successful bid would mean the investor would likely secure a guaranteed source of income from the project, Twyford says.
He says details of this will be worked out through the procurement process but it is the Government hope that land value capture will be one of the revenue streams that will help to finance the project.