An alliance led by a subsidiary of Australian construction giant Leighton Holdings has been selected as the preferred tenderer for a $1 billion road contract in the New Zealand capital of Wellington.

On Tuesday, Leighton Contractors announced that the Wellington Gateway Partnership (WGP) in which it has a ten percent stake had been selected by the New Zealand Transport Agency (NZTA) to design, build and operate (for 25 years) the Transmission Gully Motorway – a 27 kilometer long standard expressway link between Mackays Crossing and Linden which makes up a segment of the Wellington Northern Corridor linking Wellington Airport and Levin in the city’s North.

Scheduled for commencement (preparatory work) in the third quarter of next year following anticipated financial close by the middle of the year, construction will take around five years and involve 29 new bridges and a number of complex interchanges as well as the removal of six million cubic tonnes of earth.

As special purpose vehicle manager for WGP – investors of which also include HEB Construction Ltd, InfraRed Capital Partners, Bank of Tokyo-Mitsubishi UFJ (BTMU) and the New Zealand Accident Compensation Corporation (ACC), Leighton will take a majority role in the design and construct subcontract with JB partner HEB Construction and will perform all of the operation and maintenance aspects of the contract – the overall dollar value of which from the company’s perspective will equate to around $NZ800 million.

Leighton previously built the $NZ360 million 7.5 kilometer Northern Gateway Toll Road north of Auckland for NZTA as part of the Northern Gateway Alliance over a four-year period ending January 2009 as well as the staged viaduct replacement on State Highway 1 ($NZ215 million) also as part of the Northern Gateway Alliance over four years ending last year.

NZTA Chief Executive Geoff Dangerfield says the next step will be subject to the consortium accepting the terms and conditions of the offer of appointment of preferred bidder.

“If accepted, the Transport Agency will then enter into negotiations with the Wellington Gateway Partnership and if these negotiations are successfully completed, we expect to award the PPP contract for the Transmission Gully project by mid-2014” he said.

“This is one more important step in the procurement process, but there is more to be done before a PPP contract can be awarded for the project.”

In a related development, NZTA has celebrated the turning of the first sod to mark the official start of construction on the sixteen kilometer McKays to Peka Peka section of the corridor which is expected to be finished in 2018.

All up, nine sections of the corridor, which is set to facilitate access into and out of the capital as well as make the transport network more resilient to natural disasters by providing a safer and more robust road between Wellington and central North Island, are expected to finish by 2024.