Wednesday, 20 February 2013

The Roadkill in the Tunnel

In very sad news - it was reported that the perennial loser of Australian infrastructure, the Brisbane Airport tunnel, Brisconnections, has entered voluntary administration.  

...BrisConnections had long been expected to follow a similar path to the failed operators of toll-roads in Sydney such as the Lane Cove and Cross City tunnels, and Brisbane's Clem7 tunnel.....Traffic on the 6.7-kilometre toll road which connects Brisbane Airport to the central city has been half what Brisconnections was projecting it to be.... (here).

As the article sets out, in addition to being ultimately unprofitable like other tunnel projects, the modelling was flawed and it never made money.  Except for one maverick investor - Nicholas Bolton who would come close to winding it up in 2009 after acquiring a massive stake for pennies - and made $4.5 million in a last minute sellout which Australian media, shocked labelled greenmailing.  

Bolton has gone on to found bigger investments, face winding up himself and be defrauded by the Russian mafia.  He was interviewed about Brisconnections last year and was unapologetic and argued the project was 

....doomed from the start because tunnels are uneconomic for private companies (here).

So if there is a lesson from this saga it must surely be worth looking around at corporate Australia - how many other businesses have models which are uneconomic from the start and will be exposed in coming market turmoil.

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