Transurban ready to pounce on WestConnex as Sydney toll roads power profits
Sydney Morning Herald
February 7, 2017
Sydney's motorways have become an even bigger money spinner for Australian toll road king Transurban, which is eagerly awaiting the chance to swoop on WestConnex if the Berejiklian government opts to sell.
"Everyone is talking to everyone," Transurban chief executive Scott Charlton said of the large investor interest in buying in to Australia's largest motorway project.
Mr Charlton said WestConnex would be like a mini-network, making it cheaper to operate than a single toll road.
"It's more like a business in its own right as opposed to maybe just one single standalone asset," he said on Tuesday.
"And obviously it's got good demographics – I mean Sydney and NSW ... have some of the best demographics in the world when you look at developed countries."
Sydney's surging population and ensuing transport pressures led to Transurban's pre-tax profits from its six toll roads in the city surging by more than 10 per cent to $351 million in the six months to December.
Toll revenue from the M7 in western Sydney soared by more than 17 per cent to $196 million in the first half, while for the M5 in the south west and the M2 in the north it rose by 9 per cent and 7 per cent respectively.
The tolls for trucks on the M5, M7 and Lane Cove Tunnel are now three times those for cars.
While Penrith MP Stuart Ayres was last month appointed the state's first minister for WestConnex, the Berejiklian government has yet to articulate the shape of a likely sale of the motorway which is being built in three stages.
Mr Charlton said it would be a competitive process if the government did push ahead with a sale.
"WestConnex is obviously a transformational project. If we look at the long-term population growth, or even the medium-term population growth for Sydney, it needs this tremendous investment in infrastructure," he said.
"I am sure there will be lots of interest but we believe we have the opportunity to put the most value on the table."
WestConnex has been highly controversial in Sydney's inner west, partly due to the acquisition of hundreds of homes to allow for its construction.
Labor transport spokesman Jodi McKay said there needed to be transparency in any negotiations over WestConnex between the government and toll road operators.
"Transurban is almost salivating over what's coming its way," she said. "Yet for the community there is no transparency on these negotiations, and there should be."
Transurban will also operate NorthConnex – a $3 billion tunnel linking the M1 and the M2 in northern Sydney – once finished in 2019.
About 2.5 kilometres of the twin 9km tunnels have been completed so far, and 15 roads headers are now working on the project.
However, widening works to allow NorthConnex to link to the M2 has disrupted traffic on the latter, and Transurban wants to fast-tract the construction by several months by carrying out more construction at night.
Transurban earns more than 40 per cent of its total toll revenue from roads in Sydney where it also operates the Cross City Tunnel and the Eastern Distributor.
The company's pre-tax profits surged almost 14 per cent to $769 million in the first half, giving it enough confidence to raise its annual dividend forecasts.