Spurned Tollway Needs Another $65m
Sydney Morning Herald
Wednesday June 30, 1993
The operator of Sydney's newest private tollway will be forced to borrow a further $65 million in addition to its $50 million State Government loan in order to keep the project viable, it was revealed yesterday.
Interlink Roads Pty Ltd admitted that the money was needed because of lower than expected traffic volumes on the M5 in the city's west.
The chief executive of the Roads and Traffic Authority, Mr Bernard Fisk, revealed yesterday that the Government's $50 million loan to Interlink was to enable it to refinance a $230 million debt on the construction of the M5.
The extra $65 million was needed to finance the actual construction of a 6.5-kilometre section connecting the M5 to the Southwest freeway at Prestons.
Mr Fisk conceded that under the terms of the $50 million loan, the Government would not receive any repayments from Interlink until after it had repaid the $230 million and $65 million loans.
He admitted that the Government had no arrangement with Interlink requiring it to begin repayments by any given date.
The Opposition's spokesman on transport, Mr Brian Langton, called on the NSW AuditorGeneral and the Federal Loans Council to examine the loan. "This is a Government guarantee for a supposedly private enterprise operation," he said.
Interlink will operate the M5 for 30 years and may not even begin repaying the $50 million, plus 7 per cent per annum interest, until the end of that time.
Mr Fisk defended the 7 per cent rate, saying: "Many people get loans at that rate; only short-term, high-risk loans have interest rates between 11 and 16 per cent."
Three weeks ago, the Minister for Transport, Mr Baird, promised that "the taxpayer would not pay a cent" for the 6.5-kilometre extension.
But he did not reveal at the time either the Government loan or the fact that the RTA had renegotiated its contract with Interlink as part of the extension agreement.
Mr Rick Turchini, general manager and director of Leightons - which jointly owns Interlink with the Commonwealth Bank - said that under the original agreement with the Government, it could increase the toll by 9 per cent a year on top of inflation.
Under the new agreement, the toll will remain at $2 for cars until March 1996 and thereafter will increase in line with inflation.
Mr Turchini said that after nearly a year of operation, an average of just 32,000 cars a day were using the tollway, compared with the anticipated 40,000.
He said Interlink had proposed the $50 million loan to the RTA to compensate for the lower traffic flow and to build the extension, which he hoped would generate more traffic.
Truck numbers were down far more than car traffic, with drivers avoiding the $4.50 toll by taking alternative routes along local roads.
Mr Langton said he would ask the Government's Public Accounts Committee to look into the deal as part of its inquiry into the private financing and management of public infrastructure.
© 1993 Sydney Morning Herald