NSW GOVERNMENT    -   Transport for NSW

Sydney Light Rail Public Private Partnership - Final Contract Summary: 25 Aug 2015

1. Introduction 2

2. History and scope of the Sydney Light Rail project 2

3. Evaluation criteria and weightings used in tender process 5

4. Cost benefit analysis 6

5. Results of the public sector comparator 7

6. Public interest evaluation 8

7 . Risk sharing 9

Overview of the Sydney Light Rail PPP 18

8 . Participants in the Sydney Light Rail PPP 18

9 . Contractual structure of the Sydney Light Rail PPP 20

10. Confidentiality and excluded material 23

11. Auditor General's function 24

Elements of the Sydney Light Rail PPP and related agreements 24

12. Contract term and asset transfers 24

13. Primary obligations 25

14. Activities of Transport for NSW and OpCo during the construction period 25

15. Service delivery and quality requirements 27

16. Maintenance 28

17. Price 29

18. Relief Events 32

19. Compensation Events 34

20. Modifications and augmentations 36

21. Defaults under the SLR Project Deed 37

22. Termination rights 40

23. Contractual remedies available to the Crown 44

24. State step-in rights

26. Transfer of land and assets by the public sector to the contractor

27. Change of ownership and control under the SLR Project Deed

28. Dispute resolution

29. Insurance

30. Liabilities, indemnities and guarantees given by the Crown

31. Significant guarantees and undertakings

Appendix 1 Glossary of terms

This report is a summary document and should not be relied upon for legal advice. This report is not intended for use as a substitute for the actual contracts.

This report summarises the "Sydney Light Rail Project Deed" between:

(a)     Transport for NSW ABN 18 804 239 602 a New South Wales Government agency constituted by sect ion 3C of the Transport Administration Act 1988 (NSW); and

(b)     ALTRAC Light Rail Partnership, (OpCo), dated 17 December 2014 (SLR Project Deed).

The SLR Project Deed is the main contract for the Sydney Light Rail Public Private Partnership (SLR PPP). The SLR PPP is a key component of the Sydney Light Rail project.

This report has been prepared by Transport for NSW in accordance with the public disclosure requirements of the New South Wales Government's August 2012 NSW Public Private Partnerships Guidelines, and its compliance with these requirements was assessed by the NSW Auditor-General prior to its tabling in Parliament.

This report should not be relied upon for legal advice and is not intended for use as a substitute for the contracts. This report is based on the contract as at 17 December 2014 as amended on 17 May 2015. Subsequent amendments of, or additions to, the contract are not reflected in this report.

The defined terms used in this report are provided in a Glossary in Append ix A.

2. History and scope of the Sydney Light Rail project

NSW Government transport strategy

In December 2012 the NSW Government released two key strategic plans that set the framework for improving the central Sydney transport system - the NSW Long Term Transport Master Plan and Sydney's Light Rail Future - Expanding public transport, revitalising our city. The NSW Government has also released the Draft Metropolitan Strategy for Sydney 2031 that provides a comprehensive plan to manage growth of Sydney up to 2031.

Sydney's Light Rail Fu ture outlines a four stage process to deliver new and improved light rai l services in Sydney as fo llows:

(c) Stage 1 - Service integration and improvement: integration of light rail into MyZone ticketing and 131 500 information line and website (completed in June 2012) and introduction of the Opal card on light rail to make travelling easier between modes;

(d) Stage 2 - Modernise and extend the existing network: construction of the 5.6 kilometre inner west extension to connect Dulwich Hill to the CBD (completed in March 2014), modern light rail fleet introduced to improve customer experience and real time information and timetable updates;

(e) Stage 3 - Deliver a new CBD and south east service : overhaul of CBD bus network to integrate light rail and better connect commuters and completion of lightrail connecting Circular Quay, the CBD and south east Sydney including Moore Park and the University of NSW and the pedestrianisation of George Street between Hunter Street and Bathurst Street; and

(f) Stage 4 - Longer term investigations: feasibility investigations of light rail or other high capacity public transport, like Bus Rapid Transit, for additional corridors including Victoria Road, Parramatta Road, Anzac Parade to Maroubra and potentially Western Sydney, continued support to counci ls investigating potential light rail schemes; growing the light rail network in line with demand and integrated with new urban development and investigating potential extensions to the line such as to Malabar, Walsh Bay and Barangaroo.

To support and enable integration of light ra il into the CBD, a Sydney City Centre Access Strategy was also developed.

The new CSELR is an initiative being undertaken as part of a comprehensive program to

reform and improve Sydney's transport network. The key benefits of the CSELR are:

(a) unlocking of capacity in the CBD: it is estimated that, combined with a redesign

of the bus network, approximately 220 fewer buses will be required in the CBD during the morning peak;

(b) faster, more reliable and comfortable public transport: the serv ice will be a

'turn up and go' service with new light rail vehicles for the CSELR (CSELRVs) that

provide a comfortable experience for customers. The CSELR will also be integrated

with the Opal ticketing system and provide modern and accessible stops with realtime service information;

(c) urban renewal and improved amenity: the CSELR will include a 1 kilometre

pedestrianised zone along George Street between Hunter Street and Bathurst Street

which will support future urban renewal along the route; and

(d) integration of the Sydney Light Rail: the CSELR will be integrated with the IWLR.

Contract summary I Sydney Light Rail Project Page 3

The Project delivers:

(a) conveniently located stops along the 12 kilometre route;

(b) high frequency, 'turn up and go' services during peak periods;

-- Inner West Ltghl Ra~

1::::::::... Proposed stabling

~ Propos4Xi m:JintenDOce faetl1ty

0 Tra1n Interchange

4) Ferry ~ntercharllje

(c) additional special event services between Central Station and the Moore Park and

(d) major interchanges with ferry, heavy rail and bus services;

(e) a fleet of electric-powered light rail vehicles (LRVs) with air conditioning and

accessible low-floor design;

(f) a highly reliable service with the capability to fulfill the transport needs of this area

for the foreseeable future;

(g) a pedestrian zone on George Street between Bathurst Street and Hunter Street;

(h) wire-free operation between the intersection of George and Bathurst Streets and

(i) public domain improvements including possible new public spaces, paving, trees,

lighting and street furniture;

Contract summary 1 Sydney Light Rail Project Page 4

(j) approximately 12 substations to provide power for the LRVs; and

(k) a stabling facility in Randwick and a maintenance depot in Rozelle.

Following an extensive expression of interest evaluation process, the NSW Government

announced on 14 February 2014 that the following three consortia were short-listed to

move forward to the request for proposal stage for the SLR PPP. These consortia were:

(a) Connecting Sydney - Transdev Sydney Pty Ltd, Alstom Transport Australia Pty

Limited, Acciona Infrastructure Australia Pty Limited and Capella Capital Pty Limited;

(b) SydneyConnect - Serco Australia Pty Limited, John Holland Pty Ltd and Plenary Origination Pty Ltd;

(c) ilinQ Sydney - Keolis Australia Pty Ltd, Downer EDI Services Pty Ltd, Bombardier

Transportation Australia Pty Ltd, McConnell Dowell Constructors (Aust) Pty Ltd,

Balfour Beatty Australia Pty Ltd and Macquarie Capital Group Limited.

Transport for NSW released the request for proposal on 7 March 2014. On 11 July 2014,

Connecting Sydney and SydneyConnect submitted proposals for the SLR PPP. ilinQ Sydney

withdrew from the process and did not submit a proposal.

The evaluation criteria which were used to evaluate the proposals are set out in the table

Table 1: Evaluation criteria

1 Customer focussed outcomes during operations

The extent to which the proponent's approach and operations solutions:

• will deliver safe and sustainable high quality customer experience

• wi ll deliver effective stakeholder and community engagement; and

• are compatible with the wider Transport for NSW network.

2 Integrated design and optimised technical solutions

The extent to which the proponent's approach and design/technical

solutions support the provision of a safe, integrated, proven, innovative,

sustainable and high quality light ra il system that:

• promotes customer experience;

• provides capacity for project ridership demand; and

• facilitates connectivity with the wider Transport for NSW network.

3 Delivery solutions

The extent to which the proponent's approach, including program and strategy:

• provides delivery certaintt_ of the int~rated desl_g_n and qQtimised

technical solutions, including the integration of the IWLR;

• demonst rat es:

o a commitment to safety;

o how the environmental and sustainability requirements will

be delivered; and

o an understanding of effective stakeholder and community

engagement;

• demonstrates an efficient and effective means of achieving service

commencement;

• minimises disruption upon adj acent residents and businesses; and

• effectively manages impacts on the wider Transport for NSW

network and existing customers.

4 Whole of life asset management

The extent to which the proponent's approach and asset management

• wi ll ensure assets are managed and maintained on a whole of life

basis consistent with the design, technical and operations

solutions;

• support the delivery of consistently high levels of performance; and

• provide for assets to be handed back in an appropriate condition at the end of contract term.

5 Commercial and financial acceptability to Transport for NSW

The extent to which the proponent 's governance, legal and commercial

structures are robust, sustainable and appropriate.

The extent to which the proposal complies with the project agreements and

the acceptability and value for money impact of proposed departures.

The extent to which the proponent's fund ing solution is robust and

provides the necessary security and fle~ibility to respond to SLR PPP risks.

The commitment of finance and the proponent's ability to achieve contract

close and financial close in accordance with Transport for NSW's timeframe.

The financial strength of the proponent and its key risk-bearing entities.

6 Risk-adjusted cost

The extent to which the proponent's whole of life, risk-adjusted cost,

taking into account the financial risks and impacts to Transport for NSW,

demonstrates value for money.

In October 2014, following the evaluation of the proposals, Transport for NSW selected

Connecting Sydney (which subsequently changed its name to ALTRAC Light Rai l) as the

preferred proponent for the SLR PPP. Following final negotiations with ALTRAC Light Rai l,

the SLR Project Deed was executed on 17 December 2014.

A business case for the project was prepared and a summary was published in November

2013. The business case provided a sound rationale for the SLR PPP by concluding the

CSELR and associated bus network changes would achieve the project objectives,

(a) improving reliability and efficiency of travel to, from and within the CBD and suburbs

to the south east of Sydney;

(b) improving access to major destinations in the south east of Sydney, including Moore

Park, the University of NSW, Royal Randwick Racecourse and the Randwick health

precinct;

(c) satisfying long term travel demand between the CBD and suburbs in south east

(d) increasing the use of sustainable transport modes in the CBD and suburbs in south

(e) improving the overall amenity of public spaces in the CBD and suburbs in south east

Sydney; and

(f) facilitating the continued, orderly and efficient growth of urban development and

economic activity within the CBD and suburbs in south east Sydney.

The substantial net benefits of the project included:

(a) customer benefits - providing faster, comfortable and more reliable journeys for

public transport users;

(b) operating benefits - delivering a net saving in existing public transport operating

(c) broader community benefits - generated through a reduction in environmental

and health costs (externalities) such as air pollution and noise; and

(d) wider economic benefits - including sustainability benefits such as resource

efficiencies and additional greenhouse gas reductions associated with urban

densification and the benefits attributable to the va lue that people place on having a

new high capacity, efficient, public transport service, even if they do not intend to

use it regularly.

The cost benefit analysis in the business case determined that the project would generate a

net present va lue of $759 million and a benefit cost ratio of 1.4 excluding wider benefits,

or a net present va lue of $973 million and a benefit cost ratio of 1.5 including wider benefits.

The 'Public Sector Comparator' (PSC) provides a hypothetical estimate of the risk adjusted

cost of the project if it were to be designed, built and operated by the State. To develop

the estimate, the PSC was based on a reference project developed by the State, consistent

with the specified performance requirements.

The PSC performs the following central roles :

(a) provides a benchmark for assessing the net present cost of t he private sector bids;

(b) determines whether the State is receiving financial value for money derived from the

(c) acts as a key management tool during the procurement process.

Contract summary 1 Sydney Light Rail Project Page 7

The 'Raw PSC' is the base cost of delivering the project before any valuation of delivery and operating risks.

The 'Risk Adjusted PSC' includes an adjustment for delivery and operating risks to be

transferred under private sector delivery. The value of itemised del ivery and operating

risks was determined via statistical simulation using risk modelling software.

The PSC used a discount rate of 5.54%, determined consistent with Infrastructure

Australia's National PPP Guidelines which specify the discount rate to be the relevant

jurisdiction's long-term borrowing rate, taken as the 10 year average of the 10 year NSW

Treasury Corporation bond rate as advised by NSW Treasury at the commencement of

procurement.

The present value of the SLR PPP was evaluated using a discount rate that included a

systematic risk premium of 1.35% for service payments and 1.15% for the conditional

debt pay down, in accordance with NSW Treasury policies on the assessment of complying

proposals.

Table 2 provides a summary of the financial value for money analysis.

Table 2 : Financial value for money comparison between public sector and private sector

project delivery

D&C costs' 1,185.1 1,389.7 204.6 17.3%

O&M I Lifecycle 715.1 810.7 95.6 13.4%

Total costs 1,900.2 2,200.4 300.2 15.8%

Transferred risk 392.7 Included above - -

Total NPC 2,292.9 2,200.4 (92.5) (4.0%)

The comparison of the net present cost of the PSC versus the SLR PPP shows a benefit of

$92.5 million or 4.0%.

The public interest evaluation was init ially prepared during the development of the SLR PPP

procurement documentation. It was updated at several project milestones and finalised in

October 2014. The evaluation considers each of the eight public interest criteria as set out

in the NSW Public Private Partnerships Guidelines 2012. These are:

(a) effectiveness in meeting government obj ectives;

(b) achieving better value for money;

1 For PSC, D&C and O&M/Lifecycle costs are shown on a raw basis (ie excluding risk adjustments)

(d) consumer rights;

(e) accountability and transparency;

(f) public access;

(g) health and safety; and

The public interest evaluation concluded that there were no significant issues identified that

would preclude the public private partnership procurement for the SLR project.

and stakeholders. The Sydney Light Rail is expected to deliver around $4 billion in

economic benefits and provide frequent, fast, reliable light rail services that will improve

transport access to Central Station, the CBD and major destinations in south east Sydney

including Moore Park and the University of NSW.

The risk sharing arrangement is in accordance with Infrastructure Australia's National PPP

Guidelines. The State seeks to achieve best value for money by allocating risks to the party

best able to manage them. The risk allocation process results in various risks being:

(a) retained by the State;

(b) transferred to the private sector; or

(c) shared between the parties.

A structured approach to the ide ntification and analysis of potential risk and opportunities

on the project was undertaken, consistent with the Australian/New Zealand Standard for

Comprehensive risk analysis was undertaken on the project which consisted of risk

identification, assessment, allocation and mitigation strategies. The Quantitative Risk

Assessment (QRA) procedure undertaken was in accordance with the Australian

Government Department of Infrastructure and Transport "Best Practice Cost Estimation

Standard for Publicly Funded Road and Rail Construction" updated May 2011. The QRA

simulation of itemised delivery and operating risks was determined via statistical

simulation using risk modelling software. As discussed in section 5 (Results of the public

sector comparator) of this report, the results of the QRA model provides a numerical

estimate of the overall effect of inherent uncertainty and contingent risk of the project,

The SLR Project Deed and associated documents establish the obligations of each party in

managing these risks. The risk sharing arrangements for the SLR PPP are summarised in

Table 3.

Table 3 : SLR PPP risk allocation

Additional land

Licences

contamination

Need to acquire rights to access and use land

additional to that made available to OpCo

Obtaining or modifying certain specified planning

Delay in reaching completion due to legal

challenges to the planning approvals obtained by

Transport for NSW

Delays or additional costs to OpCo arising from

any modification to planning approvals required

The responsibility for complying with relevant

planning approval conditions (per the SLR

Project Deed)

The responsibility for obtaining licences under

the Protection of the Environment Operations

Act 1997 (NSW)

The responsibility to obtain any other approvals

available to OpCo at the specified time during

the construction of the SLR Works

Geotechnical and other site conditions in respect

Accuracy and completeness of information documents

Management, containment and remediation of

contamination caused or disturbed by OpCo's activities

Containment and/or remediation of pre-existing

Containment and/ or remediation of all other preexisting

contamination including that caused by

land adjoining to OpCo's site

Containment and/ or remediation of

contamination as directed by an authority

(outside of those areas managed by OpCo as a

part of OpCo's activities)

Native title claims

Utility service

Temporary works

WHS I principal

Community risks

Property noise

risk of delay to completion

causing additional costs

Investigation, protection, relocation and

Provision of services/ utilities for construction

and operations by OpCo

Compliance with utilities service agreements

( incl. any treatment requirements)

Temporary works installed are not suitable for

the purposes of the SLR Project Deed

Undertake role of being the principal contractor

on the site for WHS purposes

Exceedance of noise and vibration limits,

unacceptable traffic impacts/delays and other

disruptions to the community during delivery

Noise attenuation measures to third party

properties along the SLR site

Delays in Time overruns on early works delaying

handover of early completion of the SLR Works works

Suitability of Early works are adequate and suitable for the

early works SLR Works

OpCo's design Concept design does not meet the requirements

of delivery Phase or operations phase

Design interfaces Overall management of design interfaces (unless

relating to an interface managed by Transport for NSW)

Design review Compliance with design review process as

outlined in the SLR Project Deed

Construction Overall management of interfaces necessary to

interfaces deliver the SLR Works (noting the counterparties

to the third party agreements will accept certain

responsibilities and risks)

Site access Identification of sections within the network

Compliance with the agreed program of required

access on a sect ion by section basis

Compliance with the zone rental scheme which

requires OpCo to pay a zone fee for the number

of days OpCo exceeds the agreed occupation period

Satisfying Testing and commissioning not successfully

commissioning completed (for reaso ns other t han in relation to

requirement s a risk borne by Tra nsport fo r NSW)

Delays in Commissioning the SLR Works and

commissioning commencement of revenue service

Quality Compliance of SLR Works with the requirements

set out in the SLR Project Deed

Design and Design and co nstruction of t he SLR Works not

construction completed on time or on budget (for reasons

completion other than t hose in relation to a risk borne by

Site access Responsibi lity to acquire site area agreed via ./

SLR Project Deed and make it available to OpCo

at the specified time for IWLR operations

Delays in obtaining accreditation to take over

IWLR operations at the agreed time

Service levels Achieving IWLR performance. requirements and service levels

Operations IWLR operations and maintenance (including

Infrastructure Di lapidation or wear of existing infrastructure ./

Defects in existing infrastructure ./

Information Accuracy and completeness of information

DDA compliance Complete Disability and Discrimination Act 1992 ./

Ensure scope of work bid complies with the

Disability and Discrimination Act 1992 (Cth)

requirements and

Electricity supply

Ticketing system

Safety and

Graffiti and

vandalism risk

Managing interfaces with third parties such as

Service solution or service performance does not

levels specified by Transport for NSW (for

reasons other than those in relation to a risk

borne by Transport for NSW)

Insufficient electricity supply availability during

the operations phase to meet OpCo's

requirements (unless due to a specified relief event)

Specified performance requirements and service

levels will not be appropriate or sufficient to

Provision of information for, and interface with,

the Transport for NSW systems

Provision of, and performance risk relating to,

electronic ticketing system and equipment

supplied by Transport for NSW

Provision of the legacy ticketing system from the

date of revenue service until the legacy ticketing

Ticket sales and ticketing responsibilities

Provision of power and communications for the

electronic ticketing system components and

performance of any specified functions

Safety and security of the Sydney Light Rail

system and its customers and staff (to the

extent specified in the SLR Project Deed and

under rail safety legislation excluding law

Responsibility for cost and disruptions caused by

graffiti or vandalism during construction

Responsibility for cost and disruptions to

services caused by graffiti or vandalism within

areas managed by OpCo

Responsibility to remove or remediate graffiti

and vandalism

marketing

Stop and

interchange

Disruptions to

Customer and

stop KPis

Responsibility for cost and disruptions to

services caused by graffiti or v andalism outside

areas managed by OpCo

Control of branding and marketing activities

Conformance with Transport for NSW branding

requirements and meeting specific

responsibilities

Co ntrol and management of stops and

interchanges (within specified boundaries),

in cluding all responsibility for asset availability,

asset management, operations and cost risk

Disruptions to passenger services during the

operations phase (for reasons other than those

in relation to a risk borne by Transport for NSW)

Meeting required standards with respect to

customer and stop management KPis

Asset information Responsibility for the Sydney Light Rail asset

system information system

Maintenance Cost of maintenance and performance of assets

performance and relative to the SLR Project Deed requirements cost

Asset condition Required asset condition standards are not

through achieved through the operations phase.

operations phase

Residual life and Satisfying Transport for NSW's requirements for

end of term asset condition (IWLR and CSELR) 9nd residual

hand over design life at the end of the co ntract term

Defect - Early A defect in early works causes OpCo to incur

Works increased costs or results in an event which

triggers abatement of the Service Payment

Revenue Provision of fare enforcement functions (on

protection (fare behalf of the State Debt Recovery Office) e.g.

enforcement) inspection of tickets and issuing of

infringements, prosecution of infringement notices

Implementation of t icketing and revenue

protection responsibilities per the SLR Project

Farebox revenue

Changes to fares

Service Payments

service levels

Electricity supply

costs

Special events

(unspecified)

Farebox revenue differs from forecast

Fare setting responsibility

Abatement regime designed to incentivise OpCo

to deliver against a set of contractually defined

Increasing service levels as directed by

Transport for NSW within certain specified

bounds at a per-service kilometre price and/or

per vehicle operating hour price

Responsibility for setting service levels

Increasing serv ice levels as directed by

Transport for NSW beyond certain specific bounds

Risk of inflation indices impacting on indexed

costs in the Service Payment ca lculation

Risk of annual increases in OpCo's costs running

above the specified indices

Risk of:

• increases in costs per unit over an

agreed index during delivery

• increases in cost per unit over an agreed

index during operations (usage and

network charges)

• volume of consumption (ot her than

resulting from a change in specified

service levels) including volume related

to network charges

• costs relating to metering charges,

Australian energy market operator

charges and any other charges

except iona l, non-recurring special events (e.g.

major sporting events, political forums)

Contract summary 1 Sydney Light Rail Project

Commercial

(pre-specified)

interest rate risk

margin (postfinancial

close)

Foreign Exchange

above a level specified in the SLR Project Deed

events services as up to a level specified in the

IWLR until handover to OpCo

Obtain accreditation for the SLR Works during

delivery phase

Obtaining and maintaining accreditation for the

operations and maintenance phase of IWLR

Sydney Light Rail

Private financing of the required financing

Risk of reference interest rate increases;

• before financial close

• after financial close through to 2 years

post completion

• during the operations phase (post 2

years of operations)

Foreign exchange rate movements

• before financial close

• after financial close

Actual tax pa yable by OpCo

base case financial model

differs from the

Insurance All costs and risk associated with all insurances

required to design, deliver, operate and maintain

CSELR and IWLR

Force majeure Force majeure event prevents OpCo from

performing its obligations under the SLR Project

Deed fo r a continuous period exceeding 180

Change in Law or • project-specific change

Policy • change in disability, environmental or

safety laws

• general change

Relief events Events outside co ntrol of OpCo where OpCo is

entitled to be relieved of its obligations

Compensat ion Events outside control of OpCo where OpCo is

events entitled to be relieved of its obligations and

compensated for the increased costs and/or loss

of revenue that it incurs

The public sector parties to the SLR PPP are:

(a) Transport for NSW (ABN 18 804 239 602) a New South Wales Government agency

constituted by section 3C of the Transport Administration Act 1988 (NSW); and

{b) the NSW Treasurer, for an on behalf of the State of New South Wales, who has

executed a guarantee by the State of Transport for NSW's performance of its

obligations under several of the project's contracts, see section 30 (Liabilities,

indemnities and guarantees given by the Crown) of this report.

The main private sector parties are:

(a) ALTRAC Light Rail Partnership, a partnership between:

(i) AL TRAC Light Rail 1 Pty Limited ACN 603 192 203 in its capacity as trustee

of ALTRAC Light Rai l Trust 1;

(ii) AL TRAC Light Rail 2 Pty Limited ACN 603 194 476 in its capacity as trustee

of ALTRAC Light Rail Trust 2; and

( iii) ALTRAC Light Rail 3 Pty Limited ACN 603 190 601 in its capacity as trustee

of ALTRAC Light Rai l Trust 3.

(b) All of the units in the ALTRAC Light Ra il Trust 1 are held by ALTRAC Light Rail

Holdings 1 Pty Ltd ACN 603 167 380.

(c) All of the units in the ALTRAC Light Rail Trust 2 are held by ALTRAC Light Rail

Holdings 2 Pty Ltd ACN 603 192 221.

(d) All of the units in the ALTRAC Light Rail Trust 3 are held by ALTRAC Light Rail

Holdings 3 Pty Ltd ACN 603 185 655 in its capacity as tru stee of the ALTRAC Light

Ra il Holdings Trust 3.

(a) Acciona Concesiones S.L or one of its wholly owned subsidiaries, with a 5%

ownership interest.

(b) FSS Trustee Corporation, in its capacity as trustee of the First State

Superannuation Scheme or one of its Associates, with a 62.5% ownership interest.

(c) John Laing Investments {SLR) B.V. or one of its wholly owned subsidiaries, with

an equity interest of 32.5%.

Contract summary 1 Sydney Light Rail Project Page 18

Figure 2: OpCo group structure

(a) Alstom Transport Australia Pty Limited ABN 68 165 157 451 and Acciona

Infrastructure Australia Pty Ltd ABN 52 140 915 251 (together the D&C

Contractor). OpCo has subcontracted its obligations to design and construct the SLR

Works to the D&C Contractor under the D&C Contract on a joint and several basis.

for NSW.

(b) Transdev Sydney Pty Ltd ABN 34 096 046 052 (O&M Contractor). OpCo has

subcontracted its obligations to operate and maintain the Sydney Light Rail to the

O&M Contractor under the O&M Contract. The O&M Contractor has also entered into

an associated side contract with Transport for NSW.

The D&C Contractor and the O&M Contractor are collectively referred to as the Core

(c) Acciona Infraestructuras S.A. and ALSTOM Transport S.A. (each a D&C

Guarantor) and Transdev Australasia Pty Ltd ABN 40 079 303 816 (O&M

Guarantor). These guarantors have entered into parent company guarantees with

OpCo to guarantee certa in liabilities and obligations of each Core Contractor.

APP Corporation Pty Ltd ABN 29 003 764 770 has been jointly engaged by Transport for

NSW and OpCo to carry out independent certification services in relation to the SLR Works.

CBA Corporate Services {NSW) Pty Limited ACN 072 765 434 has been engaged by

OpCo as the Security Trustee and Commonwealth Bank of Australia ACN 123 123 124

has been engaged by OpCo as the Agent and have entered into, amongst others the

Syndicated Facility Agreement, the Financiers Tripartite Deed and the Security Trust Deed.

Astra SLR Finance Pty Limited ACN 166 382 403 of c/- Capella Capital, is a special

purpose company which was established to raise debt finance for the PPP and to securitise

OpCo's licence payment obligations. The debt raised by Finance Co is contributed to OpCo

by way of a securitised licence payment structure governed by the "Securitisation

Agreement", see section 9.

Finance Co means Astra SLR Finance Pty Limited ACN 166 382 403.

Introductory summaries of the contractual structure of the SLR PPP as at 17 December

2014, in so far as the contracts affect or will potentially affect public sector rights and

obligations, are summarised in a simplified form below.

The principal contract is the SLR Project Deed dated 17 Dece_mber 2014 between Transport

are 79 "Schedules" (including 50 "Appendices" forming part of Schedule E1), and the

complete contract is described in this report simply as the SLR Project Deed.

The SLR Project Deed sets out the terms under which:

(b) OpCo must design and construct the SLR Works and operate and maintain the IWLR

and the CSELR; and

(c) OpCo must hand the Sydney Light Rail back to Transport for NSW at the end of the

OpCo will satisfy its obligation to finance, or procure finance for, the SLR PPP through :

(a) Equity investments by the project's equity investors

In line with the NSW Public Private Partnerships Guidelines 2012 and the express

confidentiality provisions of the contracts, see section 10 (Confidentiality and

excluded material), the details of the equity investors' obligations are generally

beyond the scope of this summary.

(b) Loans to Finance Co and the securitisation of OpCo's licence payment

Finance Co, OpCo and Transport for NSW have entered into the "Receivables

Purchase Deed" under which Finance Co will purchase Transport for NSW's right to

receive licence payments payable by OpCo under the SLR Project Deed in respect of

the permanent light rail corridor and the non-corridor assets. In consideration for the

assignment of the right to receive the licence payments, Finance Co pays Transport

for NSW monthly 'receivables purchase payments'. Transport for NSW uses the

'receivables purchase payments' to fund its obligation under the SLR Project Deed to

pay OpCo- see section 17 (Price) of this report.

Finance Co will borrow the funds which it needs to pay each 'receivables purchase

payment' from a syndicate of lenders under the "Sydney Light Rail PPP -

Syndicated Facility Agreement" dated 13 February 2015 (Syndicated Facility

Contract summary 1 Sydney Light Rail Project Page 20

Agreement). Finance Co uses the licence payments it receives from OpCo as a

result of the assignment described above to service the debt it borrows under the

Syndicated Facility Agreement.

The " Payment Directions Deed" entered into by Transport for NSW, OpCo,

Finance Co and Commonwealth Bank of Australia (as Agent) dated 13 February

2015, is an ancillary document to the Receivables Purchase Deed which allows the

various securitisation related payments to be made directly from the original party

making the payment to the end recipient, without the need for separate intervening

In addition, there are intercompany loans in place between OpCo and Finance Co

pursuant to which debt raised by Finance Co can be on-lent to OpCo outside of the

securitised licence payment structure as required.

In line with the NSW Public Private Partnerships Guidelines 2012 and the express

confidentiality provisions of the project's contracts - see section 10 (Confidentiality

and excluded material) of this report - the details of the project's debt fina ncing

arrangements are generally beyond the scope of this summary.

OpCo wi ll satisfy its obligations to design and construct the SLR Works and operate and

maintain t he Sydney Light Rail through:

(a) The performance by the D&C Contractor of their joint and several obligations to

OpCo to design and construct the SLR Works under the "Sydney Light Rail D&C

Contract" between OpCo and the D&C Contractor dated 17 December 2014 (D&C

(b) The performance by the O&M Contractor of its obligations to OpCo to operate and

maintain the Sydney Light Rail and electronic ticketing system equipment under the

"Sydney Light Rail O&M Contract" between OpCo and the O&M Contractor dated

17 December 2014 (O&M Contract).

The D&C Contract and the O&M Contract are collectively referred to as the Core

(c) The performance by each Core Contractor of their obligations to OpCo to cooperate

and liaise with each other as set out under the "DCOM Interface Agreement"

between OpCo and each Core Contractor dated 17 December 2014. This deed

resolves key subcontract interface issues such as input into design documentation

and project plans, consultation, maintenance and responsibility for approvals.

(d) The performance by the Independent Certifier of its obligation to provide

independent certification of the SLR Works under the "Independent Certifier

Deed" between Transport for NSW, OpCo and the Independent Certifier dated 17

December 2014.

(e) The performance by the D&C Independent Certifier of its obligation to provide

independent certification of the SLR Works under the "D&C Independent Certifier

Deed" between OpCo, the D&C Contractor, the D&C Independent Certifier and the

Security Trustee dated 13 February 2015 ..

The following charges have been entered into to secure Transport for NSW's rights relating

to the SLR PPP:

(a) The "Deed of Charge - OpCo" between Transport for NSW and OpCo dated 17

December 2014 which secures all of the obligations of OpCo to Transport for NSW

under the project contracts by charges over the assets, undertakings and rights of

(a) The "Deed of Charge - Finance Co" between Transport for NSW and Finance Co

dated 17 December 2014 which secures all of the obligations of Finance Co to

Transport for NSW under the Receivables Purchase Deed, Payments Direction Deed

and Financiers Tripartite Deed by charges over any of the assets, undertakings and

rights of Finance Co.

(b) The "Deed of Charge- O&M Contractor" between Transport for NSW and the O&M

OpCo of the Sydney Light Rail and any electronic ticketing system equipment and

requires the O&M Contractor to transfer all of its rights, title and interests (if any) in

the assets to OpCo free from any security interests. This charge is a specific security

interest over Transport for NSW's assets, interests, rights and proceeds in respect of

(a) The "Dispute Avoidance Board Agreement" between Transport for NSW, OpCo

and each DAB Member dated 12 February 2015. This agreement establishes the

Dispute Avoidance Board (DAB) and will assist in the avoidance and effective

management of disputes throughout the term of the project. It sets out the rights,

obligations and duties of the each DAB Member, Transport for NSW and OpCo.

(b) The "Aistom CSELRV Supply Agreement" between Transport for NSW and Alstom

dated 17 December 2014. Under this agreement Transport for NSW has two options

to purchase additional LRVs from Alstom and sets out the terms for those options

and for the delivery of the LRVs, if exercised.

(c) The "Equity Purchase Deed" was also entered into by Transport for NSW, HoldCo

Laing Investments (SLR) B.V. dated 17 December 2014. This deed confers on

Transport for NSW the right to purchase the equity capital of HoldCo1, HoldCo 2 and

HoldCo 3, and sets out the related terms and conditions on when this right may be

exercised by Transport for NSW.

(d) Some of Transport for NSW's rights and obligations under the SLR Project Deed and

each Core Contractor Side Deed are subject to restrictions or additional process

requirements under the "Financiers Tripartite Deed" between Transport for NSW,

OpCo, Finance Co, the Security Trustee, the Agent and Commonwealth Bank of

for NSW to notify the Security Trustee and the Agent before it terminates the SLR

Project Deed for a default by OpCo, giving the Security Trustee an opportunity to

cure the default. Priorities between Transport for NSW's charges and securities held

by the project's private sector debt financiers are also governed by the Financiers

Tripartite Deed .

(e) The "Escrow Agreement" which sets up arrangements ensuring Transport for NSW

will be able to exercise its rights under the SLR Project Deed to obtain the source

code of various computer programs used and developed by OpCo and its contractors

between Transport for NSW, OpCo, Alstom and Assurex Escrow Pty Ltd dated 12

(f) In addition, separate "Deeds of Assurance'', entered into between Transport for

NSW, OpCo and Alstom Transport Australia Pty Ltd (the Licensed IP Owner) and

between Transport for NSW, OpCo and Alstom Transport Technologies SAS (the

Licensed IP Owner). These deeds assure Transport for NSW and any entity

authorised or licensed by Transport for NSW that Transport for NSW may continue

exercising its rights under the SLR Project Deed licence, notwithstanding any change

affecting the Licensed IP Owner's direct or indirect relationship with OpCo.

(g) Under the "PAFA Act Deed Poll of Guarantee" executed by the NSW Treasurer (on

behalf of the State of NSW) in favour of OpCo and the Security Trustee dated 17

December 2014, the State of NSW provides a guarantee of Transport for NSW's

obligations. See section 30 (Liabilities, indemnities and guarantees given by the

Crown) for further information.

The contracts listed above to which Transport for NSW is a party (amongst others) are

referred to as the Transport for NSW Project Agreements throughout this report.

A diagrammatic representation of the contract structure appears below and shows the

main contracts only.

Figure 2 : Contract structure

Under their own terms all of the SLR PPP major contracts and associated documents to

which Transport for NSW is a party, including the SLR Project Deed, may be publicly

disclosed by Transport for NSW, provided in all cases Transport for NSW redacts any

commercially sensitive information.

Each category of commercially sensitive information is summarised below.

The SLR Project Deed prohibits the release, except in specified circumstances, of

(a) OpCo's debt financing and equity arrangements, including terms, fees and margins;

(b) the cost structures, profit margins and intellectual property of OpCo and its

(c) OpCo's "base case" financial model for the SLR PPP and the financial close protocol;

(d) any values or monetary va lu es, including those used to calculate the net financial

impact or any termination payment;

(e) any value, percentage, rates, fees, escalation factors or formulas used to calculate

the Service Payment or any other payment to OpCo;

(f) the terms of the Core Contracts, each significant contract, the D&C Guarantee, the

O&M Guarantee and the DCOM Interface Agreement;

(g) the terms of the project contracts to which Transport for NSW is not a party;

(h) the terms of the projects' insurance policies;

(i) any terms that could prejudice the legitimate business, commercial, professional or

financial interests of a party to the project contracts; or

(j) any terms where disclosure would place a party to a project contract at a substantial

commercial disadvantage in projects of a similar nature.

These confidentiality restrictions do not apply, however, to any disclosures of information

by Transport for NSW, the State or any public authority as required under the Government

Information (Public Access) Act 2009 (NSW) or as required to the satisfy the requirements

of the NSW Auditor General or parliamentary accountability.

The Auditor General's ability to carry out the audit functions under the Public Finance and

Audit Act 1983 (NSW) have not been diminished by any of the SLR PPP contracts.

Upon execution of the SLR Project Deed on 17 December 2014, certain provisions of the

contract took effect immediately and these provisions are referred to as "Day 1 cla uses".

The remaining provisions of the contract came into effect on financial close on 25 February

2015, when all conditions precedent have been satisfied (or waived). The term of the SLR

Project Deed commenced on 17 December 2014 and will expire on 16 March 2034.

Transport for NSW is entitled under the SLR Project Deed to extend the term of the SLR

PPP for a period of up to two years.

All works and assets which are affixed to the Sydney Light Rail site will become and remain

the property of Transport for NSW from the time they are affixed. For example, this will