November 15, 2017

Inland rail finally off the drawing board

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After years of indecision, Australia’s $A 10bn ($US 7.7bn) Inland Rail project to create a shorter rail link between Melbourne and Brisbane is finally getting underway, as Mark Carter reports.

THE idea of an inland rail route linking Melbourne and Brisbane on the eastern seaboard of Australia has been around for many years, but it is only in the last 20 years or so that the concept has gained serious traction and only this year that funding has finally been secured.

While there have been proposals in the past from the private sector, including that of the privately- sponsored Australian Transport and Energy Consortium in the late 1990s, none have ever moved into delivery. The Australian federal government has now decided that the project should be undertaken by government-owned Australian Rail Track Corporation (ARTC).

OzInlandRailRail freight is currently at a major disadvantage compared with road on this major north-south corridor, reliant as it is on the north coast route which is plagued by sharp curves, and the need to thread freight trains through the congested Sydney metropolitan area.

Rail’s market share of land transport between Melbourne and Brisbane is estimated at around 27%, down from around 35% a decade ago. Despite this decline, with the projected growth in overall freight traffic, certain sections of the existing route will reach capacity over the next few years.

Planning for the Inland Rail project has been under way since 2008, and by early 2017 the federal government had contributed approximately $A 900m ($US 698m) for land acquisition, a business case and route selection.

In May the government finally made a definitive commitment to the project, pledging $A 8.4bn in equity payments to ARTC commencing this financial year through to 2024-25 when the route is expected to open throughout.

The government’s decision to largely self-fund the project followed a two-phase market testing process led by the Department of Finance and Macquarie Capital to consider opportunities for private sector involvement.

“This process identified a preferred model involving delivery of Inland Rail through the government’s existing shareholding in ARTC for the bulk of the project, with a Design, Build, Finance and Maintain (DBFM) structure for the Gowrie - Kagaru section of the project in Queensland to be delivered through a Public Private Partnership (PPP),” says Mr Peter Winder, ARTC executive general manager, interstate network.

“As part of the 2017-18 budget, the Australian government committed to fund Inland Rail through a combination of an additional equity investment in ARTC of $A 8.4bn, with a PPP for some of the most complex elements of the entire project, and prudent leveraging of ARTC’s balance sheet,” Winder continues. “The equity funding is being progressively released over the construction of the project to align with expenditure requirements. This is in addition to $A 900m of Commonwealth grant and equity funding already committed to the project for a range of pre-construction activities and future land acquisition.”

Of the 1700km route, 1200km will involve upgrading existing infrastructure, largely already under the control of ARTC leaving around 500km of new construction. Inland Rail will be around 200km shorter than the existing coastal route between Melbourne, Sydney and Brisbane.

A separate business unit for Inland Rail has been set up within ARTC, with around 140 people currently working on the project.

Inland Rail reached another major milestone in September when registrations of interest were called for construction of the first of the 13 schemes which make up the project.

An industry briefing was held in Sydney for contractors looking to participate in the 107km Parkes - Narromine (P2N) section in western New South Wales. It was attended by 94 delegates, with another 105 joining via web link, and included representatives of several major construction companies.

“P2N is an upgrade of an existing rail corridor, and includes a new 6km long connection at Parkes to improve access to the east-west interstate corridor,” Winder says. “The P2N project is now in the project assessment stage, a key part of which was the public exhibition period for the environmental impact statement.”

“There is an extensive community consultation process for each stage of the project to provide opportunities for the community to better understand the details of the project, its impact and its benefits,” Winder says.

Upgrades

Planned upgrades on the P2N section will include replacement of existing sleepers and track with concrete sleepers and heavier rail, track realignment and upgrading of culverts and bridges. New and extended passing loops will also form part of the project along with level crossing, signalling, and communications upgrades.

The upgrades will conform to the standards set for Inland Rail to permit operation at 115km/h for 1800m-long trains with a 21-tonne axleload, and at 80km/h for trains with a 25-tonne axleload, such as regional grain trains.

“The construction cost of the P2N project will ultimately be determined by the market, but we are looking at around $A 200-300m, with an expectation that construction will begin during the first half of 2018,” Winder says.

A major challenge for Inland Rail will be crossing the Great Dividing Range in Queensland near Toowoomba from where the line descends to the final part of the route to the Port of Brisbane. “The 126km Gowrie - Kagaru section is the most technically complex, requiring major tunnelling through the Toowoomba and Little Liverpool ranges,” Winder says. “This section will be delivered through the PPP, which will be a huge opportunity for the construction industry when it goes to market, and we anticipate expressions of interest in the PPP being called during 2018.”

The existing Toowoomba - Brisbane 1067mm-gauge line, owned by the Queensland government, is circuitous and incapable of accommodating 1800m-long double-stack container trains. This section of the route will require the construction of three new tunnels the longest of which will be the 6.4km tunnel through the Toowoomba Range at a ruling gradient of 1.67%).

All three tunnels will be around 12m in diameter to accommodate double-stack trains, the other two being through the Liverpool Range (1.1km) and Teviot Range (1km). Winder says the current cost estimate for the three elements of the Gowrie - Kagaru project is over $A 3bn.

Winder expects an upgrade of the existing Narrabri - North Star line in northern New South Wales will be the next project put to the market.

“Not only does this go toward laying the foundations of the Inland Rail route, but regional users will also benefit, especially on the section of this route between Narrabri and Moree, where increased traffic has put the existing infrastructure under pressure.”

Registrations of interest are also expected to be called next year for works in Victoria where the existing interstate route will provide the southern core for the project.

“We anticipate that construction levels will be at their highest during the 2021-22 financial year, largely driven by the extensive bridge and tunnelling works that will be occurring in Queensland,” Winder says.

With early works to start this year and the line expected to be operational in 2024-2025, the business case for Inland Rail has demonstrated a strong benefit:cost ratio of 2.62.

“While the cost to build Inland Rail is estimated at $A 10bn over 10 years, it should boost the Australian economy by increasing GDP by $A 16bn net during construction and the first 50 years of operation,” says Winder.

Inland Rail will also generate a number of spin-off benefits. “It will provide better access to and from our regional markets, and up to 2 million tonnes of agricultural freight is expected to switch from road to rail, with a total of 8.9 million tonnes of agricultural freight more efficiently diverted to Inland Rail,” Winder says.

In addition, Inland Rail will increase capacity for freight and passenger services elsewhere by reducing congestion at key choke points along the coastal route and allow for growth in passenger services, particularly around Sydney.

“There is also an expectation that it will be the catalyst for complementary supply chain investments from the private sector along the route,” he says.

Rail is already close to being competitive with road on price, and it is expected that the cost of transporting interstate freight on the new corridor will be cut by $A 10 per tonne. While rail cannot currently match transit times via the existing route compared with road, Inland Rail will offer a transit time of less than 24 hours between Melbourne and Brisbane terminals and 98% reliability, matching current road performance.

“The vision is for a project that will transform the national supply chain - make it more efficient, boost productivity, lower transit times, reduce transport costs, make our national transport infrastructure more robust and provide improved linkages with the national freight network,” Winder concludes.

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