Future stages
| The ACT Government has mapped out the future potential light rail network. The current master plan is shown below. In September 2016, the ACT Government announced that the Woden to city corridor would be the next stage of Canberra's light rail network, if the Labor government is re-elected. The ACT Government has advised that Stage 2, to Woden, will be physically connected to Stage 1, and that the contract methodology will be developed during preparation of the business case.26 It has also said that there would be logical benefit in running Stage 1 vehicles from Gungahlin through the city to Woden. The PPP contract includes a clause dealing with 'future stages'. The clause allows the ACT to: • direct Canberra Metro to design, construct, operate and/or maintain all or part of a 'future stage' pursuant to the ACT's contractual power to order variations; and • procure the design, construction, operation and/or maintenance of any future stage by a third party (including Capital Metro's contractors), but the ACT must compensate Canberra Metro for any 'unreasonable interference' caused by such third parties. |
|
If the ACT wants the Stage 1 vehicles to be able to operate on Stage 2, the second option ceases to be viable solution, for the reasons explained in section 2.7 of this paper.
If the ACT exercises its contractual power to order variations, and the parties are unable to reach agreement on the variation costs or other consequences of the variation, Capital Metro may refer the dispute to expert determination.
As mentioned in section 3.1 of this paper, it would be a courageous move for the ACT to direct Canberra Metro to implement a future stage as a variation in circumstances where the parties are unable to reach agreement on the variation costs and other consequences of the variation, as doing so would leave the Territory liable to pay whatever the expert determines, which could be well in excess of what the Territory expected or budgeted for.
Accordingly, the PPP contract also allows for the ACT to terminate the PPP contract for its convenience. If it does so, the ACT must pay Canberra Metro a termination for convenience payment equal to Capital Metro's outstanding project debt, plus the fair market value of Canberra Metro's equity, plus any other reasonable costs incurred by Canberra Metro as a result of the termination (including subcontract break costs). This amount is unlikely to represent value for money.
____________________________________________________________________________________________
26 Light Rail Stage 2: Frequently Asked Questions, ACT Government and Transport Canberra, available at https://www.transport.act.gov.au/__data/assets/pdf_file/0011/1056926/Light-Rail-stage-2-FAQ.pdf