There is speculation that Australian toll road business RiverCity Motorway Group (RMG) may be forced to sell Brisbane’s Clem Jones Tunnel (Clem 7) after revealing that the firm only had enough cash to make up financial shortfalls for the next year. In a preliminary final report (to June 30 2010) released yesterday, RMG said it had posted a loss of A$1.67 billion following an impairment write-down of A$1.56 billion on Clem 7.
The Clem 7 was only opened in March this year, with a target daily traffic volume of 60,451 after one month and 100,284 after 18 months. However, in August 2010 the average daily volume stood at 27,908. This is despite a toll-free phase in operation between March and April; a 30 percent reduction in the toll between April and June; and a 50 percent reduction from 1 July to date.
In the report, RiverCity group chairman Robert Morris said: “While traffic volumes have increased since opening, current traffic will need to improve markedly over the coming months for the Group to be in a position to meet its ongoing financial obligations after its existing cash reserves are utilised.”
He added: “The current situation is serious, but it is very early days in the life of our 41-year concession. The Board and management will continue to focus on building traffic volumes over the coming months. To maximise the number of potential users of the tunnel, tolls will remain at their current reduced level for the remainder of 2010.”
There has been a heightened focus on what are increasingly seen as unrealistic traffic projections for some toll road projects – particularly in Australia where a number of toll roads have struggled to get anywhere near forecasts. One of the more high-profile examples was Sydney’s Lane Cove Tunnel, which failed to meet debt repayments and was acquired by toll road operator Transurban for A$630 million in May this year – a $A1 billion discount to the price paid by the project’s original sponsors three years prior.
In its report, RMG said it had appointed Integrated Management Information Systems in May 2010 to provide “an expert view on traffic volumes” and a final assessment will be provided by the end of this year. “At this early stage, the precise reasons for the reduced traffic volumes to date are unknown,” the report added.