Court Case Threatens to Derail Tram Project

Once again the CBD and South East light rail project is in disarray as Transport for NSW and the Spanish company Acciona who is building the line gear up for a Supreme Court showdown over a series of disagreements next Friday.

Acciona has made demands for an extra $1.2 billion in government funding for the line, beyond the $500 million cost blowout already allowed for by the state government. This demand, made through the companies lawyers threaten to double the original $1.6 billion cost of the project.

Acciona’s lawyers have made claims that the government misled the contractor on the complexity of the work including how many utility lines would have to be moved during construction.

The government is also furious that Acciona has been taking ago-slow approach to construction, with less than 100 workers on the project each day, significantly less then the 500 needed for the project to open near on-time.

For the week ending March 22, a progress report showed the project moved only 0.4 per cent forward. This compared with periods last year when 3 to 5 per cent of the project was being built each week. As of this week only half the civil construction has been finished, despite the fact that it was due for completion late last year.

Acciona, which reports to a private-sector consortium known as ALTRAC, sent a letter to Transport for NSW on February 22, warning of Supreme Court action over their demand.

The letter states “In addition to the sum claimed in the commercial list statement by way of loss and damage, our client also maintains it is entitled to interest on the sum of $101m, bringing the total sum sought by our client to $1.206bn. We await your prompt response. Please note that if we have not received your client’s reply within 21 days of the date of this letter, we are instructed to finalise and file the Commercial List Statement and commence proceedings against TfNSW without further notice.”

Mr Constance responded on March 22 with “As I have previously advised you in our face-to-face meetings, the NSW government is very unhappy with your performance in relation to the construction of the Sydney Light Rail project.

“I have no doubt that Sydney’s residents and businesses are also incredibly frustrated. I recently described NSW as an unhappy customer — let me make it clear we’re now an angry customer.

“As you know, the Sydney Light Rail Project is being delivered under a public-private partnership model where Transport for NSW has contracted the ALTRAC Light Rail Partnership to build and operate the project.

“ALTRAC has in turn engaged Acciona to design and build the civil construction aspects of the project. Therefore there is no contract between Transport for NSW and Acciona, nor indeed between it and the state of NSW.”

Mr Constance said any issues Acciona had should be raised with ALTRAC. “You will also be aware that the contract between Transport for NSW and ALTRAC, and in turn the contract between ALTRAC and Acciona, spells out how the risks of dealing with utilities for the construction of the light rail are to be managed.

“Acciona negotiated and accepted these provisions and has since made use of them. I was therefore shocked and dismayed to be informed that Acciona … has threatened legal proceedings against Transport for NSW, based on allegations that Transport for NSW made misrepresentations to Acciona about the utilities in the lead-up to the signing of the contracts in December 2014. We have always said this is a complex project and both Acciona and ALTRAC knew this when they signed up.”

These devolpmelnst threaten to further the delay the project that as we have earlier reported is already running over year behind schedule.

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