New Zealand's substantial infra pipeline

A new independent Infrastructure Commission for New Zealand − Te Waihanga − is due to be up and running as of this month (October 2019). Industry participants are calling for its proactive leadership to deliver major infrastructure initiatives, such as a NZ$10.3 billion ($6.48 billion) potential relocation of the freight port serving Auckland, from Auckland Port up to Northport, to be recommended to Parliament in November.  

Te Waihanga is expected to start work by the end of this year (2019). The bill to establish the autonomous crown entity gained royal assent on 25 September and its board has been in place since August, led by CEO Jon Grayson and chair Alan Bollard.

The Government of New Zealand has already committed this year to an ambitious "prototype" pipeline of 174 infrastructure projects it intends to develop over the next five years, requiring a total investment of roughly NZ$6.1 billion.

Published in May (2019), that prototype pipeline is focused on the construction or renovation of a variety of infrastructure assets, including social, defence and transport projects. The plan will be developed by the infrastructure transaction unit within the NZ Treasury, and procured by the Te Waihanga infrastructure commission.

Not all of the projects in the published pipeline are new − Waikeria Prison PPP reached financial close last year (2018) thanks to a five-year mini-perm backed by five commercial banks − but the programme shows the New Zealand government's desire to facilitate heavy investment in the country's infrastructure. 

The commission's major goal is to set a clear, long-term horizon for the planning, development and delivery of projects in New Zealand, through the participation of state government − both central and local − and the private sector.

Once the Commission starts work, in time it could include private sector projects, the Infrastructure Minister Shane Jones said in May 2019.  

The year 2018 saw only one New Zealand PPP reach financial close – Waikeria Prison PPP – as the Jacinda Ardern-led Coalition Government in power since 2017 has not favoured the model. This remains the most recent PPP project for the country.

Central government agencies to be involved in the prototype infrastructure pipeline include the Department of Corrections, the Ministry of Education, the Ministry of Health, and the New Zealand Defence Force and Transport Agency. The Ministry of Health has just set up a new health infrastructure unit, headed by director Karl Wilkinson joining from Aurecon on 21 October.

The commission will make quarterly updates to its project list and will be expected to deliver a new 30-year development plan every five years. According to the government, frequent updates to the plan would allow the commission to integrate feedback from involved parties and take advantage of new technologies and opportunities that might come forward.

According to IJGlobal data, 36% of the projects are new and the rest represent renovation works. The majority of projects fall within the competences of the Ministries of Defence and Education (30% to each), a quarter of all projects are in the transport sector, while prisons and health facilities represent a combined 15%.

The bulk of the projects (78%) have an estimated cost of up to NZ$15 million, with only a small fraction (5%) exceeding the NZ$100 million mark.

 

When it comes to financing distribution, the Government of New Zealand has favoured road rejuvenation, followed by the justice and defence systems. Healthcare and education get the next largest slice of funds, while municipal infrastructure and bridges are expected to receive as little as 5% of the pipeline budget.

Focused on social infrastructure, the pipeline aims to respond to public pressure for better health, educational and judicial services. Among the most notable projects, all slated for completion between 2020 and 2035, are:

Name

Type

Estimated value ($m)

Sub-sector

Expected completion

Waikeria Prison

Brownfield

565.20

Justice

Q2 2022

Campbells Bay School

Greenfield

9.98

Education

Q1 2021

Manawatu - Wanganui Double Hangar

Greenfield

114.98

Defence

Q2 2024

Auckland Mount Roskill Dominion Road School

Greenfield

3.35

Education

Q1 2021

Papakura-Bombay Road Refurbishment (17KM)

Brownfield

265.98

Roads

Q3 2025

Manawatu - Wanganui Highway (12.4KM)

Greenfield

264.01

Roads

Q4 2020

New Mangere Bridge

Greenfield

26.40

Bridges

Q3 2025

New Zealand Horizontal Infrastructure Upgrade

Brownfield

116.42

Defence

Q2 2035

Greenlane Clinical Centre Refurbishment

Brownfield

124.68

Healthcare

Q2 2022

Wellington-Hutt Valley Walking and Cycling Facilities - Ngauranga-Petone

Greenfield

49.50

Municipal

Q1 2023

Auckland City Hospital Refurbishment

Brownfield

124.68

Healthcare

Q2 2022


Auckland City Hospital is getting a NZ$300 million upgrade, with the government and the Auckland District Health Board providing the bulk of the funding.

Waikeria Prison PPP, which is under construction, is also a standout project. Once completed, the facility’s NZ$850 million expansion would increase the prison’s capacity from 766 inmates to over 1,200. The improved correctional facility will also feature a special mental healthcare unit.

Notable roads projects include an improvement to the 12.4km highway between Manawatu and Wanganui and the renovation of a 17km road between Papakura with Bombay, south of Auckland. The latter development is especially vital for the metropolitan area of Auckland, which has a population expected to grow by a staggering 42% (around 720,000 people) over the next 30 years.

Asset SnapshotWaikeria Prison

Value:
NZD 850.00m (USD 569.41m)
Full Details

Asset SnapshotCampbells Bay School

Est. Value:
NZD 15.00m (USD 9.98m)
Full Details

Asset SnapshotManawatu - Wanganui Double Hangar

Est. Value:
NZD 175.00m (USD 114.98m)
Full Details

Asset SnapshotAuckland Mount Roskill Dominion Road School

Est. Value:
NZD 5.00m (USD 3.35m)
Full Details

Asset SnapshotNew Zealand Horizontal Infrastructure Upgrade

Est. Value:
NZD 175.00m (USD 116.42m)
Full Details

Asset SnapshotManawatu - Wanganui Highway (12.4KM)

Est. Value:
NZD 400.00m (USD 264.01m)
Full Details

Asset SnapshotNew Mangere Bridge

Est. Value:
NZD 40.00m (USD 26.40m)
Full Details

Asset SnapshotWellington-Hutt Valley Walking and Cycling Facilities

Est. Value:
NZD 75.00m (USD 49.50m)
Full Details

Asset SnapshotPapakura-Bombay Road Refurbishment (17KM)

Est. Value:
NZD 400.00m (USD 265.98m)
Full Details

Asset SnapshotAuckland City Hospital Refurbishment

Est. Value:
NZD 187.50m (USD 124.68m)
Full Details

Asset SnapshotGreenlane Clinical Centre Refurbishment

Value:
NZD 187.50m (USD 124.68m)
Full Details

Transaction SnapshotWaikeria Prison Expansion PPP

Financial Close:
17/09/2018
Value:
$557.24m USD
Equity:
$57.69m
Debt:
$499.55m
Debt/Equity Ratio:
90:10
Concession Period:
25.00 years
PPP:
Yes
Full Details