AusRAIL, Market Sectors

NSW to profit from Waratah project

<span class="" id="parent-fieldname-description"> The NSW Government could now earn a tidy profit from the Waratah train project which was once thought to be doomed but has turned around into a production success story. </span> <p>Initially set up by the Iemma government in 2006, the Reliance Rail PPP consortium is now fully funded, having made the last drawdown payment on a $357m bank facility on September 6.</p><p>It’s a huge turnaround from February 2012, when the state government agreed to take on 100% equity in Reliance Rail in exchange for a $175m investment in 2018.</p><p>The government’s Public Private Partnership between Sydney Trains and Reliance Rail saw Downer Rail awarded the contract to design, manufacture and maintain the 78 eight-car train sets (626 carriages) for Sydney’s suburban rail network.</p><p>Now the PPP is fully financed, NSW treasurer, Mike Baird, says the government could sell the rights to that equity in 2018 for around $188m – $13m more than the government’s promised investment.</p><p>“The NSW Government’s restructuring agreement provided all involved parties with the confidence to get on and fulfill their contractual obligations and we are now reaping the benefits,” Baird said.</p><p>“This has been a good investment for the state, with the value of the state’s investment rights in Reliance Rail increasing as each milestone passes.”</p><p>Downer struggled enormously during the first half of the project and experienced significant production and delivery delays both at Changchun in China, where its partner CRC is building the trains, and at its own facility in Cardiff, Newcastle, where the remaining 30% of vehicles are being fitted out and tested.</p><p>The company was due to hand over the first Waratah to Sydney trains for practical completion in April 2010, but the first train did not enter service until July the following year.</p><p>However, since that time, Downer has managed to turn the project around into a production success story, with China now outputting three trains per month compared to one train a month in 2011, with Cardiff’s output jumping from around one train per month to one train every six working days.</p><p>51 of the 78 air-conditioned trains are now in service on the Sydney Trains network.</p><p>“Customers are starting to see more and more Waratahs right across Sydney, including the Western Line,” state minister for transport, Gladys Berejiklian, said.</p><p>“The last train is expected to be delivered to Sydney Trains in 2014, which will mean around 95% of the timetabled fleet will be air-conditioned.”</p><p>The bank facility providers involved in the project are NAB, Westpac, Mizuho Bank and Sumitomo Mitsui Banking Corporation.</p><p>For an exclusive with Downer Rail on the Waratah recovery story see the Spring print edition of Rail Express.</p>