Opportunities for Japanese Investors Transport Infrastructure in Australia and New Zealand Allens is an independent partnership operating in alliance with Linklaters LLP. Australia and New Zealand transport infrastructure opportunities – a snapshot* Queensland Beerburrum to Nambour Rail Upgrade ($780m) Commonwealth Gold Coast Light Rail – Stage 3 Inland Rail Freight Corridor ($10.66bn) (Qld, NSW, Vic) Port of Townsville Expansion ($520m) Western Sydney Airport ($5bn) (NSW) Port of Gladstone ($3.7bn) Sydney-Melbourne High Speed Rail Townsville Eastern Access Rail Corridor ($700m) North Queensland Bulk Port Corporation ($719m) Rail Franchising Brisbane Metro ($944m) Cross River Rail ($5.4bn) Sunshine Coast Airport Expansion ($347m) European Train Control System ($634m) New South Wales Maldon to Dombarton Railway Sydney Metro West ($10bn) Rail Franchising Regional Rail Fleet Replacement Parramatta Light Rail ($1bn) Western Australia Sydney Metro Fremantle Port – City and Southwest ($12.5bn) Utah Point Bulk Handling Facility Perth Airport Third Runway ($600m) Metronet ($2.945bn) South Australia Victoria Australian Adelaide Tram Link Fishermans Bend Tram Link Capital Territory Gawler Rail Electrification – Stage 2 ($462.5m) High Capacity Metro Trains 2 ACT Light Rail Stage 2 Melbourne Airport Rail Link ($5bn) Melbourne Airport Third Runway ($500m) Gippsland Line Upgrade ($435m) Wider Network Enhancements Level Crossing Removal Ballarat Line Upgrade ($518m) Melbourne Metro ($11.031 bn) New Zealand Key Wellington Northern Corridor ($427m) Brownfield Auckland Airport Expansion ($1.68bn) Greenfield Papakura to Pukkekohe Rail Electrification Prospective – Likely to occur within the next five years ($120m) Proposed – Subject to business case/ scoping study or similar City Rail Link ($2.43bn) Announced – project has a firm commitment from a Tamaki Regeneration Project government, but has not yet entered the market Under procurement Bidder Announced *Data based on ANZIP (http://infrastructurepipeline.org/) 13/09/2017 Highlighted opportunities Rail franchising Inland Rail Freight Corridor > Australia’s population is expected to increase by 9.5 > The Commonwealth Government has committed million people in the next 24 years, 80% of which will $9.3 billion to Inland Rail, which is a $10.66 billion be focused in the capital cities. By 2031, this growth proposed project to build 1,700 km of freight rail is expected to lead to an extra 1.3 million public infrastructure to link Victoria, NSW and Queensland. transport boardings each day in Sydney, 450,000 > Additional funds will come from Public Private more in Perth and 460,000 more in Brisbane. Partnerships. > The Australian Infrastructure Plan (2016) recommended Governments around Australia should Melbourne Airport Rail Link expose public transport services to contestable supply through ‘franchising’. Franchising is a > The proposed rail transit between the Melbourne contracting model that involves giving privately CBD and Melbourne Airport is valued at owned franchisees responsibility for operating and approximately $5 billion. It is expected that the maintaining the rail and other transport procurement approach will be through a Public infrastructure as well as providing passenger services. Private Partnership. > Infrastructure Australia recently estimated that > The Commonwealth Government announced $30 franchising of rail and bus networks could save $15.5 million toward a business case for the project in the billion in Australia's largest cities between 2017 and 2017-18 Budget. Subject to a positive business case, 2040. This represents significant incentive, and the project could be supported through the National therefore opportunities, for investors. Rail Program. > New South Wales and Queensland present the most prospective franchising opportunities. Victoria will Metronet also refranchise its metropolitan train and light rail > The long term blueprint for rail infrastructure in networks again in 2023. Western Australia includes the proposed building of the Morley and Ellenbrook Link as well as the Sydney Metro West announced extensions of the Joondalup Line to Yanchep and Thornlie Line to Cockburn Central. > The NSW Government has announced a plan to develop a new underground metro railway > The procurement value is estimated at $2.945 billion, connecting the CBDs of Parramatta and Sydney for although the procurement method is not yet an estimated cost of $10 billion. determined. > While the procurement method for this project is still Sydney-Melbourne High Speed Rail to be confirmed, the request for procurement stage is > This proposed high-speed rail project is expected to expected to commence in late 2017. cost $114 billion and take another 50 years. > The Commonwealth Government announced $20 Cross River Rail million in funding to support the development of > This $5.4 billion project involves the construction of a business cases in the budget this year. 10.2 km north-south rail link, including 5.9 kms of rail Adelaide Tram Link (‘AdeLINK’) tunnel under the Brisbane River and CBD. > Project main works have been split into: > The Adelaide Tram Link is proposed to comprise a network of trams connecting Adelaide’s CBD north, > the tunnel, stations and development to be south, east and west. delivered as a Public Private Partnership; and > No procurement value or method has yet been > the rail, integration and systems to be proposed. delivered as an alliance. > Funds have been committed from the National Rail Program. Global Awards > Australian Law Firm of the Year Chambers Asia Pacific 2017 > Ranked as a Band One firm in 18 practice areas Chambers Asia-Pacific 2017 > Australian Deal Team of the Year Australasian Law Awards 2017 > Property, Infrastructure & Projects Deal of the Year – WestConnex Stage 2 Australasian Law Awards 2016 > Ranked number one by value for both announced and completed M&A deals Thomson Reuters Australia and New Zealand M&A League tables 2016 > Winner, Innovative firms ‘ Australian Lawyer – 2016 They are up there in terms of setting a benchmark, and they are a pleasure to deal with. ‘Chambers Asia Pacific 2017 Contacts Nigel Papi Paul Kenny Penny Alexander Head of Japan Group Partner Managing Associate T +61 2 9230 5179 T +61 3 9613 8860 T +61 3 9613 8513 [email protected] [email protected] [email protected] John Maxwell Ryokichi Asaka Julian Barendse Managing Partner, Solicitor, Tokyo Senior Associate Tokyo T +81 3 6212 1223 T +61 3 9613 8349 T +81 3 6212 1227 [email protected] [email protected] [email protected] 16966D Allens is an independent partnership operating in alliance with Linklaters LLP www.allens.com.au Case study: Rail Franchising in Victoria > Over 15 years of franchising of metropolitan rail and soon to be in fourth generation contracts. > Opportunity for New South Wales and Queensland to review what has gone well and what enhancements could be made. > To date, Franchisees have generally consisted of consortia made up of European transport operators and Australian infrastructure providers. > Vertically integrated model where Franchisees have responsibility for operating and maintaining the rail and other transport infrastructure, as well as providing passenger services. The Victorian model, like that in the UK, operates on a net cost basis under which the Franchisees are entitled to retain farebox revenue and bid the additional subsidy they require from the State to operate the network and provide services. > Arrangements have been severely challenged by operator insolvency and other events. > Model continues to be refined and tested by internal and external impacts. > Allens’ long running involvement in Victorian government franchising of rail services has given us a strong insight into the factors that lead to successful outcomes for the state, public transport users and the private sector operators. Simplified Contractual Structure Victorian Rail Infrastructure Rolling Stock Rolling Stock Track Head Lease Head Lease Holdings4 Public Transport Victoria > Services Agreement > Franchise Agreement > Franchise > Regional (comprising Agreement Infrastructure Lease 8 Functional (comprising Modules) 8 Functional Modules) > Security s > Security s Metro Trains V/Line1 Yarra Trams3 Melbourne2 Interoperator Interoperator Agreements Agreements Regional Metropolitan Metropolitan Train and Train Tram Bus Services Services Services Notes: 1. State owned post 2003. 2. JV between MTR Corporation, CIMIC & China Communications Construction Company. 3. JV between Keolis & Downer EDI. 4. 2 fleets of train and tram rolling stock are owned by third party lessors. 5. Security provided by, or on behalf of, Franchisee to support its obligations. Note: Bus arrangements have been excluded from this diagram. 16966D Allens is an independent partnership operating in alliance with Linklaters LLP www.allens.com.au .