Govt signs PPP to build first section of Northland Expressway

The government has signed a public-private partnership (PPP) agreement with Northway consortium to build the first section of the Northland Expressway between Warkworth and Te Hana.The Crown and the Northway consortium will design, build, finance, maintain and operate the expressway, with early construction works expected to begin "in the coming months".Transport Minister Chris Bishop said the expressway was one of the government's most significant infrastructure investments.He said the scope of the expressway included a 26km four-lane expressway with grade-separated interchanges at Warkworth, Wellsford and Te Hana."It also includes 15 standardised bridges, two underpasses, numerous large culverts, 12 wetland stormwater treatment basins, and twin tunnels of around one kilometre through Kraack Hill above the Dome Valley near Dome Forest."Over the life of the expressway, the benefits are expected to include 145 fewer deaths and serious injuries, travel time savings of seven to 10 minutes per vehicle, more than 1000 fewer closure hours caused by unexpected events such as severe weather, and the removal of around 1000 heavy vehicles a day from the existing SH1 main streets through Wellsford and Te Hana." he said.Bishop said Northway consortium was selected as the preferred bidder in May and the PPP represented good value for taxpayers."The final project cost has a net present value (NPV) of $3.649 billion, around $251 million below the $3.9 billion public sector comparator approved by cabinet in March last year, which estimates what the project would cost under traditional public sector procurement."Every dollar invested is also expected to return $1.60 in wider economic benefits to New Zealand."He said the PPP was the latest in New Zealand's history."Lessons from previous PPPs, including Transmission Gully, along with international best practice and market feedback have been incorporated from the outset."This has included a more sophisticated approach to allocating risk, securing property and resource consents earlier, and establishing a stronger evidence base for setting affordability thresholds."Bishop compared a PPP to getting a mortgage for a house."Rather than paying the full cost upfront, it is spread over a longer period and repaid over time. But a PPP goes further than financing alone. The private partner is also responsible for designing and building the road, maintaining it, and meeting agreed performance standards throughout the life of the contract."Bishop expected building the expressway would provide wider employment and economic developments."The Northway consortium expects around 60 percent of total physical works spending to flow through local supply chains, creating opportunities for local subcontractors across earthworks, drainage, pavements, bridges and other civil engineering works."In addition, Northway has indicated it will create youth and graduate opportunities through internships, graduate roles, apprenticeships and school-to-work pathways, with a focus on local young people, including Māori and Pasifika."These opportunities will be backed by training, mentoring and pastoral support to help participants gain skills, qualifications and pathways into long-term infrastructure careers," he said.Bishop admitted it was "an expensive road" but it was worth it."It's an expensive project, but it is going to be worth it for the people of Northland and indeed the wider Auckland economy and the wider golden 'quadrangle' - as I call it - between Northland, Auckland, Hamilton and Tauranga."He said the government learned a lesson with the Transmission Gully project, which was also a PPP."That took a long time, and they ran into quite a lot of difficulty getting the consents for the road. There's lots of reasons, but that is one of the reasons why the project was ultimately delayed."[However] the Northway bid... the simplest way to think about this is the road was consented and designated, and we have the corridor that's required to be built in without getting any different consents. The Northway bid just fit that perfectly, and so they were able to get on and build the road without having to go off and get a whole lot of other new resource consents."The road is expected to open in 2033, with full works completed in 2034.