Source: New Zealand Government
The Government is exploring toll concessions as a tool for delivering important new roads faster and more efficiently, with an initial focus on six potential opportunities, Minister of Transport Chris Bishop says.
“This Government is committed to investing in high-quality transport infrastructure to grow the economy and help get Kiwis to where they want to go quickly and safely. We are exploring a range of tools – such as toll road concessions – to help achieve this,” Mr Bishop says.
“New Zealand already has three existing toll roads in Auckland and Tauranga, and three more in construction or development. All our new roads, such as our Roads of National Significance, are being assessed for tolling.
“While our existing toll roads are operated by the New Zealand Transport Agency, the Government is for the first time exploring the potential for private involvement across our growing network of toll roads in New Zealand, including the potential use of toll concessions.
“A toll concession is where a private company, called the concessionaire, is granted the right to operate and maintain a toll road for a set period of time, and collects the revenue from it to offset their costs and provide a return on investment. In return, the Government receives an up-front capital payment which it can reinvest into new roading projects, potentially bringing them forward by years.
“For existing toll roads, a concession can be granted to operate and maintain a road. Toll concessions can also form part of a model to deliver new infrastructure, where a private partner is engaged to design, build, operate and maintain the road and could then collect toll revenue to meet its operations and maintenance costs.
“Toll concessions have several key benefits, including generating upfront payment of capital which can be reinvested into new infrastructure projects, increasing efficiency by utilising the private sector’s expertise in construction, maintenance and tolling operations as well as their technological innovations, and sharing operational risks with a private operator such as increases in maintenance costs.
“It is important to note that under any toll concession, the Crown retains ownership of the toll road. Management is transferred and reverts to the Crown at the end of the concession period.
“Toll concessions are used widely overseas. A relatively local example of a successful toll concession is WestConnex in Sydney, Australia. WestConnex is a 33km toll road including Australia’s longest tunnel at 22km, completed in November 2023. It was delivered through concessions to build, operate, finance, maintain and toll this road in three stages.
“The benefits of WestConnex for the motorists of Sydney have been huge – including slashing travel times from Parramatta by up to 40 minutes and bypassing more than 52 sets of traffic lights.
“And further afield, the Limerick Tunnel, a 675m twin road tunnel in Ireland, was built through a PPP in 2010 and is being operated, maintained and tolled by a private firm until 2041”.
“New Zealanders deserve faster travel times, safer routes, and more resilient connections, like those delivered by WestConnex. The Government is
seeking to understand how we can grasp opportunities to use upfront capital to help fund future projects, like other countries do, unlocking economic growth and productivity benefits sooner.
“Shortly, we will begin the market sounding stage to test these concession opportunities and gain first-hand insights into the features which would make these a valuable proposition for the private and public sectors.
“To begin with, we’ve identified six routes that may be worth exploring to build our understanding of the viability of a concessions market here.”
The six routes are:
Northern Gateway Toll Road (currently tolled)
Tauranga Eastern Link Toll Road (currently tolled)
Takitimu Drive Toll Road (currently tolled)
Penlink (to be tolled once open)
Takitimu North Link (to be tolled once open)
Ōtaki to North of Levin (to be tolled once open).
“The Government also wants to test how toll concessions could support delivery of upcoming Roads of National Significance,” Mr Bishop says.
“Examples include Cambridge to Piarere, the Hawke’s Bay Expressway, the Belfast to Pegasus Motorway and Woodend Bypass, and Tauriko West State Highway 29. While decisions have not yet been made, all Roads of National Significance are being assessed for tolling.
“Testing the potential for toll concessions on future Roads of National Significance will inform the Government’s decisions about the best ways to deliver and toll these future routes and in what circumstances private partners would be keen to be involved in their delivery and operation.
“We want to hear from private players who are interested in investing in the New Zealand transport network. This is part of our plan to create opportunities for Kiwis and boost economic growth.
“This is an excellent opportunity for those investors and financiers with an interest in toll concessions to engage with us as we shape up potential opportunities.
“Any concession will need to have a strong case to be taken forward, and the benefits and costs to New Zealanders will be carefully considered.”
The Government expects to make decisions on toll road concessions this year.
Note to editors:
The Government Policy Statement on Land Transport 2024 (GPS 2024) sets out the Government’s intention to consider concessions for delivering projects, and that opportunities for private partners to operate services such as road tolling be explored. GPS 2024 also sets an expectation that all Roads of National Significance are assessed for tolling.
New Zealand currently has three toll roads in operation – the Northern Gateway in Auckland, and Takitimu Drive and Tauranga Eastern Link in Tauranga.
In December 2024, the Government also agreed to toll three new roads – Ōtaki to North of Levin, O Mahurangi – Penlink, and Takitimu North Link. These three roads are in construction or development and will help motorists gain faster, safer, and more reliable journeys.
Market sounding is being led by the Ministry of Transport and National Infrastructure Funding and Financing Limited (NIFFCo) with input from the New Zealand Transport Agency (NZTA) and Treasury.
Exploring toll concessions gives effect to the National-ACT coalition agreement to institute long-term city and regional infrastructure deals, allowing PPPs, tolling and value capture rating to fund infrastructure.
