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Infrastructure Finance: The Sydney Cross City Tunnel  
 
Product Ref: 07/324C Company: Cheung Kong Infrastructure

Product Type: Case Industry: Public Sector & Non-Profit

Related Product(s): Teaching Note
This case explores events surrounding the development of the Sydney Cross City Tunnel, an innovative infrastructure project developed by the New South Wales government in Australia in conjunction with Cheung Kong Infrastructure, Cheung Kong's Hong Kong listed infrastructure investment arm. The tunnel opened for traffic in 2005. This case analyses three matters: the political and institutional background that led to the decision to develop the Cross City Tunnel; the general economic assumptions upon which the venture had been based; and the build-operate-transfer project finance arrangements put into place to develop and finance the tunnel venture. The case explains the project finance arrangements surrounding a typical road transport infrastructure which seems to have failed, and raises questions about estimates of demand for the tunnel and traffic management arrangements surrounding access to the tunnel.
Functional Area : Finance & Investments

Issues: This case aims to demonstrate the structuring of complex public-private finance initiatives, in this case taking the form of a tolled tunnel across Sydney CBD. It demonstrates the complexity associated with urban transport projects developed along project finance principles. It also shows that opportunism can originate even in the public sector in Private Finance Initiative (PFI) arrangements, and thus presents a risk to be managed or mitigated.
Length: Text: 11 pages
Exhibits: 27 pages
Country: Australia

Pub. Year: 2007 Level of Difficulty: 2
         
This product type is available in the following language(s):      English
         
Related Information: N/A
 
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