Turning $3b into $618m: Brisbane’s failed Clem7 tunnel sold off

September 27, 2013 – 1:31PM

Matt O’Sullivan

Business Reporter

 

New owner: Clem7 tunnel went into receivership two years ago.

New owner: Clem7 tunnel went into receivership two years ago. Photo: Glenn Hunt

More than two years after it was placed in receivership, Brisbane’s Clem7 tunnel has been sold to Queensland Motorways for $618 million – a fraction of the $3 billion it cost to build.

The tollroad’s receiver, KordaMentha, has selected Queensland Motorways ahead of three other consortiums including one led by UBS Infrastructure Fund.

Queensland Motorways, which is owned by the Queensland Investment Corporation, controls most of Brisbane’s tollroads, including the Gateway and Logan motorways and the Legacy Way tunnel, currently under construction in the city’s west.

The state-owned business had been seen as the most logical buyer of the Clem7 given the tunnel would fit well within the rest of its network.

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RiverCity Motorway, the previous owner of the tunnel under the Brisbane River, was placed in receivership in February 2011, less than a year after it was opened to motorists.

Queensland Motorways chief executive Brendan Bourke said the change of ownership would be ‘‘seamless’’ for motorists.

“The deal positions Queensland Motorways to further consolidate the Brisbane toll road network in the future and will provide us with a platform to work with Brisbane City Council and the state government to improve the Brisbane road network over the longer term,” he said.

The $618 million price tag will include $33 million in taxes and other costs.

In striking parallels with other failed public-private projects such as Sydney’s Cross City and Lane Cove tunnels, the Brisbane tunnel failed to attract anywhere near the number of motorists that were forecast.

That was despite RiverCity using almost every means possible, including slashing tolls, to entice motorists to use the tunnel named after a former Brisbane lord mayor, Clem Jones.

Analysts had expected the tunnel to sell for less than $650 million.

The 6.8-kilometre tollway includes a 4.8-kilometre tunnel linking roads on each side of the Brisbane River.

The sale is expected to be completed within the next three months.

It comes just two weeks after Sydney’s Cross City Tunnel failed financially for the second time in eight years.

– additional reporting by Cameron Atfield

Brisbane Times

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