PPP contract awarded for Pūhoi to Warkworth motorway project


Construction will begin later this year on the new Pūhoi to Warkworth motorway following today’s announcement by the NZ Transport Agency that a contract has been signed for the project to be delivered as New Zealand’s second Public Private Partnership (PPP) for a state highway, after the Transmission Gully motorway project in Wellington.

NZ Transport Agency Chief Executive Fergus Gammie said the signing of the PPP contract between the Transport Agency and the Northern Express Group for the 18.5km motorway marks a major milestone for Auckland and Northland.

“State Highway 1 between Pūhoi and Warkworth is a key transport link connecting Northland to the upper North Island freight triangle of Auckland, Waikato and Tauranga. 

“The Pūhoi to Warkworth motorway forms the first section of the Government’s Pūhoi to Wellsford Road of National Significance, aimed at enabling economic growth by providing a safer and more reliable transport link for the region.

“The new motorway will extend the Northern Motorway (SH1) from the Johnstone's Hill tunnels just south of Pūhoi to a point north of Warkworth,” Mr Gammie said.

Under the PPP contract, the Northern Express Group will finance, design, construct, manage and maintain the Pūhoi to Warkworth motorway for the 25 years that will follow the expected five year period to build the motorway. Full ownership of the highway will remain with the public sector. It is aimed to have the Pūhoi to Warkworth motorway open for traffic by 2022.

The Northern Express Group is made up of firms with considerable experience in the design, construction, finance, maintenance and management of key infrastructure projects. The equity partners in the consortium are:

  • Accident Compensation Corporation
  • Public Infrastructure Partners II LP (managed by Morrison & Co PIP Ltd)
  • Acciona Concesiones S.L.
  • Fletcher Building Ltd

 Mr Gammie said the ‘net present’ contract price for delivering the Pūhoi and Warkworth motorway through a PPP is $709.5 million.

“This is the ‘whole of life’ cost for the Northern Express Group to build the motorway over the next five years and then operate the road for 25 years. Because the costs are spread over time, they are expressed in today’s dollars.”

Mr Gammie said PPPs have a proven track record internationally for delivering great results for large-scale infrastructure, and using a PPP made good sense for the project. 

“The size and complexity of the project means it will benefit from the innovation the private sector will bring to the task.

“The 'availability’ PPP model adopted for the project also means that payments are not linked to the volume of traffic using the road. The PPP contractor will be paid for making a safe road open and available to traffic, and after achieving specified performance levels such as safety, customer satisfaction, reliability  and journey times.

“A PPP procurement also means that the motorway is being delivered quicker than if funding was obtained through conventional channels.

“The Transport Agency will also continue to consider PPPs for other large-scale and complex infrastructure projects which could potentially benefit from the innovation and value-for-money that can be achieved through a PPP approach,” he said.

More information about the Pūhoi to Warkworth Road of National Significance is available here.

Questions and answers about today’s PPP contract signing are available here.