East West Link

Australia’s Victoria Government has finalised an agreement with a consortium with regards to reimbursing costs incurred on the cancelled A$10.7bn (£5.5bn) East West Link project.

According to the deal, Victoria will pay A$339m ($263m) to the consortium, which was selected to build Melbourne’s East West Link motorway.

According to Lend Lease, the agreement is expected to result in a reduction in the company’s construction backlog revenue of approximately $1.4bn.

The East West Connect consortium included Capella Capital, Bouygues and Acciona.

The agreement was reached in the form of a non-binding heads of agreement, providing a resolution to the project for which financial close was reached in October last year.

"The cancellation will cost 7,000 jobs and discourage private investment in infrastructure."

According to Lend Lease, the agreement further enables the Victorian government to acquire the project companies for a nominal consideration and also enables their sponsors to halt work on the East West Link project.

Following election in Victoria in November last year, the construction JV was directed by the government to suspend work on the East West Link project.

Australian Prime Minister Tony Abbott said that the cancellation will cost 7,000 jobs and discourage private investment in infrastructure.

According to him, the unprecedented announcement that the government would rather pay hundreds of millions to a consortium, instead of building the East West Link, is a massive set back to Victoria.

The East West Link was a proposed 18km tollway in Melbourne, Australia.

In September last year, the Victorian coalition government signed a $5.3bn contract with the East West Connect consortium to build the road, with initial work on project scheduled to begin at the end of 2014 and completion by 2019.

Image: The Eastern Freeway in Melbourne where the East West Link will begin. Photo: courtesy of BlackCab via Wikipedia.