Sydney Metro Northwest

On 20 June 2012, the NSW Government announced Sydney's Rail Future, its long-term plan to increase capacity on Sydney's heavy rail network to support a growing population and improve customer experience. The NSW Government committed to deliver the Sydney Metro Northwest (then known as the North West Rail Link) as the first of the new rapid transit rail services to connect Sydney's global economic corridor with high growth employment and residential centres.

The Sydney Metro Northwest is being delivered in three major contract packages:

• The Tunnels and Stations Civil Works package, which is being delivered by Thiess Pty Ltd, John Holland Pty Ltd and Dragados Australia Pty Ltd (the TSC Contractor) under a D&C contract between Transport for NSW (TfNSW) and the TSC Contractor, valued at $1.15 billion.

• The Surface and Viaduct Civil Works package, which is being delivered by Salini Impregilo S.p.A and Salini Australia Pty Ltd (the SVC Contractor) under a D&C contract between TfNSW and SVC Contractor, valued at $340 million

• The Operations, Trains and Systems package, which is delivered under a PPP contract between TfNSW and NRT Pty Ltd in its own capacity and as trustee of the NRT Unit Trust (NRT), valued at $3.7 billion.19

Together, these three packages of work will deliver the Sydney Metro Northwest between Cudgegong Road, Rouse Hill and Chatswood.

Each contract package was competitively tendered. The Operations, Trains and Systems (OTS) package was the final package to be tendered.

NRT, the counterparty to the PPP contract, is a special purpose vehicle established by the successful bidder for the OTS package. The owners of NRT are MTR Corporation (20 per cent), Leighton Holdings (10 per cent), Plenary Group (10 per cent) Marubeni (20 per cent) and the Aria Investments Trust (10 per cent), Palisade's Australian Social Infrastructure Fund 2 (10 per cent) and the Partners Group (20 per cent).

The PPP contract requires NRT to finance, design and construct the rail systems and the trains, and then operate and maintain the metro system for an expected period of 15 years.

In return, TfNSW has agreed to:

• procure the construction of the Tunnels and Stations Civil Works and the Surface and Viaduct Civil Works, on time and in accordance with the relevant contract specifications;

• undertake specified works in connection with the conversion of the existing railway between Chatswood and Epping;

• pay a capital contribution during the construction phase, monthly service payments during the operations phase, and a 'conditional debt pay down amount' between year two and year four of the operations phase, provided certain conditions are met; and

• acquire the land required for the project site and provide NRT with access to it.

Figure 2: Project structure - Sydney Metro Northwest PPP

NRT has subcontracted its obligation to design and construct the rail systems and trains to an unincorporated joint venture between MTR Corporation (Sydney) NRT Pty Ltd, John Holland Pty Ltd, CPB Contractors Pty Ltd and UGL Rail Services Pty Ltd (together, the D&C Contractor).

Two members of the D&C Contractor - MTR Corporation (Sydney) NRT Pty Ltd and UGL Rail Services Pty Ltd (SJV) - have, in turn, subcontracted the design and manufacture the trains and communications based train control systems to Alstom Transport Australia Pty Ltd.

NRT has subcontracted its obligation to operate and maintain the metro system to Metro Trains Sydney Pty Ltd (the Operator). The Operator is owned by MTR Corporation (UK) NRT Ltd (60 per cent holding), John Holland Sydney NRT Pty Ltd (20 per cent holding) and UGL Rail Services Pty Ltd (20 per cent holding).

The Operator has, in turn, engaged Alstom Transport Australia Pty Ltd to provide certain maintenance support for the trains and communications based train control systems.

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19 A copy of the operative provisions of the PPP contract is available at this link: http://www.transport.nsw.gov.au/sites/default/files/b2b/projects/nwrl-ots-project-deed-applied-redaction.pdf. Other parts of the PPP contract and other contracts relating to the North West Rail Link (now known as the Sydney Metro Northwest) can be accessed at this link: https://www.transport.nsw.gov.au/industry/contracts-awarded/transport-projects.