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The Andrews government and Transurban were warned six months ago there was a risk that the West Gate Tunnel's builders would pull out of the Andrews government's flagship project due to soil contamination.
Toll road giant Transurban announced to the ASX on Wednesday morning that that the joint venture responsible for building the project – CPB Contractors and John Holland – had written to the company signalling plans to terminate its contract with the tolling firm over what they claim is a failure to deal with contaminated soil.
The construction companies are claiming that issues around contaminated soil that contains PFAS – the chemicals that shut down the CFA training college in Fiskville – are proving extremely difficult to manage.
A source familiar with the negotiations said the project's builders sent Transurban and the government a letter of intent six months ago, claiming they were confronted with a force majeure event, which refers to an unforeseeable circumstance that makes it impossible to fulfil the terms of a contract.
The builders claim that because the force majure problem was not solved within six months, they are entitled to rip up the contract, the source said.
The contract for the West Gate Tunnel includes a force majeure clause that covers contaminated soil as well as other traditional ‘Act of God’ events such as earthquakes and floods.
The West Gate contract states the contract can be terminated under a force majeure clause if the event "prevents the project company from carrying out all or a material part of the project activities ... for a continuous period exceeding six months".
Force majeure clauses, while commonly associated with large scale mining projects, are now commonplace in infrastructure and construction contracts, according to an expert report by PriceWaterhouseCoopers infrastructure specialists penned in 2016.
The state opposition said the project was now in "chaos", and questioned whether a 10-year extension of the CityLink contract – given to Transurban in return for building the West Gate Tunnel – would now be reviewed by the Andrews government.
Australian Workers Union state secretary Ben Davis confirmed crews had turned up for work on Wednesday morning, and that he expected work to continue as normal today.
He said the brinksmanship that Transurban and its contractors were engaged in was irresponsible, and that both were effectively "holding the project to ransom" to protect their profits.
"Yet again the joint venture and Transurban seem to be trying to maximise their legal position by holding the project to ransom. This is irresponsible," Mr Davis said.
A West Gate Tunnel construction site in New Street, South Kingsville.CREDIT:JOE ARMAO
Transurban said in its ASX statement that it had received a legal termination document from CPB Contractors and John Holland, seeking to end the contract "on the basis of a force majeure termination event", Transurban's company secretary Fiona Last said.
This article first appeared on www.theage.com.au
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