Bouygues, Lend Lease Join Transurban in Sydney Road Work

Bouygues SA, the construction and media conglomerate led by Martin Bouygues, and Lend Lease Group, Australia’s biggest listed developer, are set to design and build a A$3 billion ($2.7 billion) Sydney road project.

The two companies won the contract to build the nine kilometer (5.6-mile) NorthConnex tunnel link between two motorways in the city’s northwest, Melbourne-based toll-road operator Transurban Group, which is managing the project, said in a statement to the Australian Securities Exchange today. The Australian and New South Wales governments will each invest as much as A$405 million, with toll charges funding the rest, a statement from the state government said.

Australian Prime Minister Tony Abbott is pushing to advance more than A$80 billion of planned infrastructure projects, including the upgrade of Sydney’s highways, to spur growth in an economy suffering from a cooling mining investment boom. The federal government has committed about A$11.5 billion to projects to help shrink an infrastructure funding gap of about A$300 billion.

“NorthConnex represents a renewed partnership between government and the private sector that balances the risk of these types of tunneling infrastructure projects,” Patricia Forsythe, executive director of the Sydney Business Chamber, said in a statement. “Finishing Sydney’s road network will be a boon to business and a driver of efficiency for the city.”

NorthConnex Impact

The construction budget for NorthConnex, which will link the M1 and M2 motorways, will be A$2.65 billion, and the rest will fund land acquisition and project delivery, according to Transurban. NorthConnex will take about 5,000 trucks off Pennant Hills Road, which runs roughly parallel to the planned tunnel, and cut peak hour travel times by as much as 15 minutes, the company said.

Transurban approached the state government in 2012 to design, build, operate and fund the link, it said in the statement. The appointment of a builder moves the project into the planning approval stage with public display of the environmental impact assessment, it said.

Construction will begin next year and the tunnel is expected to open in 2019, according to Transurban. The project is also subject to finalization of the contract, it said.

Transurban shares have risen 5.6 percent this year, compared with a 0.5 percent drop in the benchmark S&P/ASX 200 index. Lend Lease securities have gained 1.6 percent and Bouygues’s have surged 11.3 percent.