SCSA cash payment

A cash contribution of $32.25 million paid by the SCSA to the developer comprising:

•  $21 million for modifications and additional works to which the SCSA agreed that the developer was entitled under the original contractual terms

•  $8.5 million to settle claims to which the SCSA does not admit liability, but considered it had a financial risk

•  $2.75 million to settle a site access claim after the 2006 Commonwealth Games.

Time extension

Agreement to extend the practical completion date for principal works by 15 months from April 2005 to the end of July 2006 and relieve the concessionaire and the developer of their obligation to pay liquidated damages for not meeting the original scheduled completion dates.

Change to concession period

Under the original SDA signed in 2002, practical completion of construction was scheduled for completion on 27 April 2005. At this time, operations were to be handed over to the concessionaire, and the SCSA would commence quarterly payments of the core service payments, comprising capital, operating and insurance cost components. The capital and operating components were to be indexed.

As the completion milestone was not met, the SCSA withheld all payments.

Under the terms of the global settlement, the concession period (originally scheduled to be the 30-year period commencing 27 April 2005) was effectively split into 2 concession periods:

•  The 30-year operating concession period commenced upon handover of operations to the concessionaire on 1 August 2006 was 15 months later than agreed in the original SDA

•  The 30-year capital concession period remained the original 30-year planned period commencing 27 April 2005.

As a result of this decision, the SCSA then owed (and paid) the concessionaire the capital payments owing from 27 April 2005 in a $30 million lump sum upon settlement. This amount would have to have been paid regardless of the change in concession period.

However, the SCSA calculated that it was providing the concessionaire with a $20 million non-cash benefit by sticking to the original concession period for the capital component, i.e. had it delayed the concession period by 15 months, the NPV of total capital payments would have been $20 million less than the NPV of the payments commencing from 27 April 2005.

De-scoped works

As part of the settlement, some rail modification and signalling upgrade works were removed from the project scope, as the works agreed in the original SDA were not adequate to meet the long-term needs of the State as well as rail operators. This led to DOI taking over responsibility for completion. The State received a credit (calculated by an independent reviewer) from the concessionaire for the de-scoped works.

Concessionaire cash payment

The concessionaire was required to make a cash payment of $30 million to the developer, and to implement an air quality management system, monitor the air quality levels daily and be accountable for any non-compliance with air quality standards.