Cross City Tunnel

Update Sep 2013

State eyes tunnel buyback

The O’Farrell government is considering buying the troubled Cross City Tunnel to cut the hefty toll in an effort to reduce traffic congestion in the central business district.

”People are having a think about the options but it would be pushing it to say there’s a plan now to buy the tunnel,” the source said. Another senior figure said the idea of buying the tunnel, which opened in 2005 and immediately struggled to attract a third of the 70,000 cars a day its backers said would use it, had ”some merit”.

The tunnel attracts about 40,000 cars a day. If the $4.91 one-way toll was abolished, it could help remove another 30,000 cars a day from city streets, a third source said.

KordaMentha partners Martin Madden and Cassandra Mathews were appointed receivers on Thursday after a disputed tax bill prompted the tunnel’s debt-laden owners to put it into administration.

”The receivers are confident the tunnel is an attractive asset which will provide solid returns for the right buyer,” Mr Madden said.

In 2007 the tunnel was bought out of receivership by Royal Bank of Scotland, EISER Infrastructure Partners and Leighton Contractors, for $300 million in equity and $412 million in debt. Sources said it would be available for sale for about $500 million to $600 million.


Sydney’s Cross City Tunnel enters voluntary administration, blames Government on financial woes

Cross City Motorway, which is owned by the Royal Bank of Scotland, EISER Infrastructure and Leighton Contractors, was placed in voluntary administration on Friday.

It could soon be the second time owners of the two-kilometre tunnel linking the western and eastern fringes of Sydney’s CBD have gone into receivership.

The current owners bought the concession in 2007 after the first owner collapsed when usage fell well short of traffic forecasts.

Cross City Motorway had been in talks to refinance a $70 million debt, but its chairman Ed Sandrejko says the State Government’s legal action to recover $64 million in stamp duty made a deal impossible.


=====  2007  =====
Driving Alone
Sydney’s Cross City Tunnel 
Peter Phibbs 
University of Western Sydney
Abstract: The cross city tunnel in Sydney has been a fairly spectacular failure as a Public Private 
Partnership – the operating company has gone into receivership less than 2 years after the tunnel 
opening in August 2005. The tunnel, built at a cost of about $800 million failed to attract the traffic 
required to meet interest payments. Even when use of the tunnel was free, the traffic did not approach 
the forecast traffic levels of 90,000 vehicles per day. 
The paper argues that the project was always a marginal one – the volume of traffic that needs to 
move east -west across the city is relatively small. This fundamental problem was exacerbated by the 
high cost of the toll ($3.56), the lack of traffic growth in the east of Sydney and the negative reaction of 
consumers against what they saw as Government attempts to force them to use the tunnel. 
Whilst a major difference of this project compared to earlier PPPs is that the private partners bore 
most of the risk, the actions of the Government in breaking the terms of the original contract will 
expose them to higher risks and financing costs in the future. The issue for the private infrastructure 
sector is that the public views the project as a dismal failure and hence their appetite for future PPPs 
may be diminished.



==========  May 2006 ========

The Cross City Tunnel Project
Auditor General’s Report
Performance Audit



A Parliamentary inquiry was set up in December 2005

My submission #8 had this title

and following table of key decision dates and peak oil warnings ignored:

Peak Oil Warnings # Cross City Tunnel
1995: The World’s Oil Supply 1930-2050; Petroconsultants. CJ Campbell and JH Laherrere warned that coil production will peak by or after 2000, followed by permanent decline 1
March 1998:The Scientific American publishes  Campbell / Laherrere’s article “The End of Cheap Oil”.Nov. 1998: Chartered Institute of Transport in Australia, National Symposium, Launceston. Brian J Fleay analyses the topic: “Climaxing Oil. How will transport adapt?” 2


1998: As part of “Action for Transport 2010” a road tunnel under the CBD was proposed. Concept design started by RTA
July 1999: C.J. Campbell presents to the House of Commons All Party Committee “The imminent peak of world oil production” 4
Apr. 2000: The US Department of Energy puts on its web site the slide show “Long Term World Oil Supply”, based on the USGS 2000 mean estimate, showing a possible peak in 2016 under the assumption of moderate decline rates after the peak. www.eia.doe.govMay 2000: J.Laherrere publishes “Is USGS 2000 Assessment Reliable?” 5




Aug. 2000: RTA releases EIS

Sep.  2000: RTA calls for tender even before public exhibition closes

Fall 2001:K.Deffeyes, Professor at Princeton University, publishes his book “Hubbert’s Peak, The Impending World Oil Shortage”, forecasting a peak in 2005, but not later than 2009.Dec 2001: Australian Energy News reports about a visit of Les Magoon (USGS) to Australia in an article entitled “Oil production curve cause for concern” 7 Oct 2001: Minister of Planning approves EIS
Jan 2002; Matt Simmons; The World’s Giant Oilfields, Hubbert Center Newsletter 2002/1 8 Feb. 2002: Cross City Motorway Consortium announced as preferred proponent
Mar 2002: Woodside Petroleum CEO Akehurst informs shareholders of Australian oil decline:
May 2002: Matthew Simmons: „Depletion and US Energy policy”, International Workshop on oil depletion, Uppsala 10
Jun 2002: Bruce Robinson on Australia’s oil vulnerability 11 July 2002: Supplementary EIS put on display
Sep 2002:The Sydney Morning Herald publishes an article entitled “The oil war”Oct 2002:CSIRO’s „Future Dilemmas“ highlights serious physical constraints in Australia’s economy: 1213 Nov. 2002: Supplementary Representations Report released for public consumption
Dec. 2002: Minister for Planning approves “Approved Activity”