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Taxpayers will fork out extra cash to cover cost overruns on the $11 billion Metro Tunnel project after a deal was struck with the project's contractors.
The state government would not confirm how much more it would pay, with the contractors believed to have agreed to cover a share of the cost blowout in the deal that was struck on June 30.
Premier Daniel Andrews and Transport Infrastructure Minister Jacinta Allan inspect the Metro Tunnel in FebruaryCREDIT:JOE ARMAO
The project's cost overruns are widely reported to be as much as $3 billion, with the Cross Yarra Partnership (CYP) consortium building the project understood to have under-bid on the project that has since faced unexpected construction and geological challenges.
The government has repeatedly claimed that it would not pay any more than the agreed $11 billion for the project.
In December Treasurer Tim Pallas said the project's price was "fixed" and Victoria would not be forced to chip in extra cash.
"The state’s interests have been well protected in the contract," he said at the time.
In the wake of warnings from the Victorian Auditor-General of a project cost blowout, Public Transport Infrastructure Minister Jacinta Allan said the "overall project is within project budget".
CYP – made up of Lendlease Engineering, John Holland, Bouygues Construction and Capella Capital – switched off the project's tunnel-boring machines in December last year and demanded that the government stump up funds to help cover the extra costs.
The government said at the time that shutting down tunnelling was an "obvious tactic" aimed at squeezing money out of Victorian taxpayers.
"We have a message for those building companies," Premier Daniel Andrews said. "These tactics will not work.
There have been problems with the State Library station.CREDIT:JOE ARMAO
"We have a contract and we expect the contract to be honoured, we expect the project to be properly delivered against the terms of that contract."
A mediator was called in to broker an agreement and negotiations have continued throughout the year. The government still expects the project to be delivered by late 2025.
A government spokeswoman said discussions of this nature were common for large infrastructure projects.
“Mega infrastructure projects around the world face challenges that they have to work through with their contractors – this is no different," the spokeswoman said.
This article first appeared on www.theage.com.au
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