Melbourne tunnel to cost Vic extra $1.9b
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Victorian taxpayers will be slugged an extra $1.9 billion under a settlement over cost blowouts from the delayed West Gate Tunnel project.
The state government has signed off on the deal after months of negotiations with project manager Transurban as well as builders John Holland and CPB Contractors.
Under the terms, the tolling giant will pay an extra $2.22 billion and building sub-contractors have agreed to forgo $1 billion in revenue and possibly more.
The government will chip in another $1.9 billion of taxpayers’ money to restart the project – now set to cost more than $10 billion in total – further adding to the state’s $19.5 billion budget deficit.
It estimates ripping up the contract and finding another builder would have cost $6.8 billion, while pushing out the completion date to the second half of 2027.
The major project was originally scheduled to be finished in 2022 but has been plagued by problems after contaminated soil was discovered at the site.
It is now estimated to be completed in late 2025.
The Victorian government, however, believes the cost blowout is mainly due to Transurban under-bidding its original contract, not the discovery of the PFAS soil.
Once a site is approved to dump the toxic soil, John Holland and CPB Contractors will be required to restart tunnel boring by early 2022.
Transport Infrastructure Jacinta Allan said talks had been “complex and difficult” and spruiked the necessity of the tunnel as second crossing for motorists over the Yarra River.
“Victoria needs the West Gate Tunnel Project to provide an alternative to the West Gate Bridge, take thousands of trucks off local roads in the inner west and slash travel times from the Western suburbs to the CBD,” she said in a statement on Friday.
Treasurer Tim Pallas added the agreement would protect thousands of jobs.
“The deal we have reached means that both Transurban and the state will make a significant additional contribution to the project,” he said.
