Article: The bells toll for Eastlink

[ozbob]

From the Herald Sun click here!

The bells toll for Eastlink

The bells toll for Eastlink

   Peter Rolfe
   From: Sunday Herald Sun
   August 07, 2011 12:00AM

FOREIGN investors are set to take control of Victoria's longest tollway in a $2 billion deal - as motorists continue to snub the pay-for-use road.

EastLink, the 39km road opened to fanfare by the former Brumby government three years ago to link Donvale with Frankston, is on the verge of being taken over by multinational investment firm CP2.

The proposed deal would see CP2 replace ConnectEast as owner and operator of EastLink, putting the tollway under the control of a new board of directors and sparking fears of job losses, price hikes and slipping service standards for motorists using the road.

The deal - financed by superannuation, insurance and pension funds in China, Korea, the UK, New Zealand, Denmark and the Netherlands - would also create a tollway monopoly in Melbourne with CP2 the biggest shareholder in Transurban, which already owns and manages CityLink.

The tollway is badly under-performing, with less traffic than forecast, less revenue than expected and its share price cut in half.

In the lead-up to EastLink's June 2008 opening, 258,000 vehicles were forecast to use the tollway everyday and its share price hovered near $1.

Last month the average number of daily trips taken on the road was 186,332 and last week the share price was at 53 cents.

With the average trip toll $3.38, the loss in revenue between the traffic forecast and the amount using it alone is at least $242,237 every day.

ConnectEast's directors have unanimously backed the takeover bid at 55 cents a share "in the absence of a superior proposal".

That bid is expected to be approved at a meeting of shareholders next month.

If it meets all checks, the deal is expected to be done by early October.

But the takeover must also win the approval of the State Government, the Victorian Supreme Court and Foreign Investment Review Board.

The Baillieu Government is under pressure to use its powers to set strict conditions on the takeover to ensure Victorian motorists are not worse off as a result of the sale.

ConnectEast and the Government deny the deal will push toll rates up or down or lead to immediate Victorian job losses, citing a contract deed that stipulates rates set in the original contract will stay in force regardless of the owner.

ConnectEast spokesman James Tonkin said there would be no impact on EastLink's toll prices under the deal. "Under the EastLink Concession Deed with the State of Victoria, which runs until 2043, tolls can only be adjusted up or down once a year (July 1) in line with consumer price index movements," he said.

"EastLink will continue to have the cheapest per kilometre car tolls of any private tollway in Australia."

He said EastLink's operations would continue to be based in Ringwood.

But insiders told the Sunday Herald Sun that theoretically a new owner could renegotiate the term and jack up toll prices, though it was unlikely to be in their commercial interest.

Government spokeswoman Kate Walsh refused to directly say whether the Government would consider its own takeover, instead saying the Government's infrastructure spending priorities were to "invest in new projects that boost the state's productivity and address the transport gridlock".

Asked directly what role the Government would play in the process, Ms Walsh said: "It would be inappropriate for the Government to comment or speculate on any possible outcome."

But Opposition roads spokeswoman Jacinta Allan said it was up to the Government to set conditions on the sale, such as the Brumby government's orders that the company's headquarters be based in Melbourne.

She called on Treasurer Kim Wells, Roads Minister Terry Mulder and Premier Ted Baillieu to come clean on what they knew and what they planned to do in the interest of Victorians.

"What advice has Kim Wells got? Are they taking an interventionist approach or sitting back waiting to see what happens as usual," she said.

"I hope the Government is getting advice on the broad impacts this deal could have, including jobs."

ConnectEast in February announced that it had cut its losses to $2.7 million - down from a whopping $43.3 million in 2009.

For the first time, it can be revealed today that the company expects to turn a profit in the next two or three years, though it still has to make a $17 million payment to Leighton Holdings subsidiary Thiess John Holland in January for early completion of the road.

A confidentiality deed was struck between ConnectEast and CP2 in March this year.

More than three billion people hold ConnectEast shares.

RACV road and traffic manager Peter Daly said EastLink's operations were "satisfactory", but additional wire barriers were needed to protect motorists from roadside hazards, such as the large columns supporting overhead sign gantries between the Princes Highway and Maroondah Highway.

[Jonno]

...but Leacy Way and my rates are not at any risk are they...Oh No. Not at All.  Legacy Way is going to operate in a parallel universe where building roads reduces traffic congestion and toll roads are actually profitable.

[Mr X]

I just hope we don't even consider building the East-West link (Toowong - Buranda) or the northern orbital freeway through Trouts Road. Madness, especially after Clem7.

[Golliwog]

I just hope we don't even consider building the East-West link (Toowong - Buranda) or the northern orbital freeway through Trouts Road. Madness, especially after Clem7.

Don't know about the East-West link (it was a BCC proposal anyway, not State so I doubt it will go anywhere) but the Trouts Rd corridor is still being investigated for both road and rail and potentially a combo of the two. Thats what I heard a few months ago anyway.

[O_128]

I just hope we don't even consider building the East-West link (Toowong - Buranda) or the northern orbital freeway through Trouts Road. Madness, especially after Clem7.

East west tunnel is the perfect rail line, buranda, uq, st Lucia, indooroopilly.
There is no way trouts road will be a road after legacy way goes bankrupt :p

[Mr X]

Wouldn't a better alignment be Woolloongabba (CRR) - West End - UQ - Indro?