Inland Rail Market Testing

Inland Rail Market Testing

The Australian Government announced on 3 May 2016 that it will deliver Inland Rail through the Australian Rail Track Corporation (ARTC) in partnership with the private sector, and that there will be a market testing process to identify opportunities for private sector involvement.
The market testing process is to be led by the Department of Finance (Finance) and jointly overseen by Finance and the Department of Infrastructure and Regional Development.

Market Testing

Invitation to participate in the Stage Two Market Testing process

Following successful completion of Stage One Market Testing, the Department of Finance is inviting interested parties to nominate for participation in Stage Two Market Testing.

As a result of feedback received from Stage One Market Testing, and consideration of that feedback against the Australian Government's objectives, the Stage Two Market Testing Parameters have been agreed and four shortlisted options have been identified.

The four shortlisted options all involve the delivery of Inland Rail through the Australian Rail Track Corporation (ARTC), in partnership with the private sector for the design and construction of Inland Rail, with the following opportunities for private sector involvement:

  1. ARTC delivery of the entire Inland Rail corridor through a combination of Government financing and ARTC debt-raising in partnership with the private sector
  2. ARTC delivery of Inland Rail with a Design, Build, Finance and Maintain contract for all or part of the 126km Toowoomba to Brisbane section, including tunnels
  3. ARTC delivery of Inland Rail, using a combination of Government financing and ARTC debt raising, with a take or pay arrangement for coal producers from Toowoomba to Brisbane (Gowrie to Kagaru, 126 km)
  4. A BOOT (Build, Own, Operate, Transfer) contract for the Parkes to Brisbane section (975 km), with Government and/or user support, and ARTC delivery of the remainder of the Inland Rail alignment 

Finance and its advisers will be exploring a number of possible delivery, procurement and structuring approaches within each of the four shortlisted options, including considering combinations of these options.

The Stage Two Market Testing process will seek market participants’ views on:

  • preferred delivery model of the four shortlisted options;
  • willingness and capacity to participate in the shortlisted options;
  • understanding of the various risks associated with the delivery of Inland Rail;
  • capacity to enhance the performance and value of Inland Rail, including design and operation; and
  • potential project level procurement models for the design and construction of Inland Rail.

The outcomes from the Stage Two Market Testing will inform the Government’s consideration of the delivery and financing of Inland Rail.

It remains open to participants to suggest alternatives to the four shortlisted options, subject to those alternatives demonstrating credible, evidence based compliance with each of the Parameters for Stage Two, which are: 

  1. Inland Rail is integrated into and enhances the existing Interstate Rail and national Freight Network
  2. Inland Rail design meets operational demand in the medium term, and ensures any staged / further major capital investments to achieve this are fully funded
  3. Inland Rail optimises competition in above rail operations including through an open access regime consistent with competition policy
  4. The Inland Rail route alignment is broadly consistent with the route identified in the Inland Rail Implementation Group Report with the capacity for amendments where such amendments improve the economic benefits and financial viability or the efficiency of approvals, delivery or service outcomes
  5. Service offerings are consistent with minimum prescribed transit time, train length, axle load and double stacking performance parameters

The Department of Finance retains the right not to consider further any alternatives that do not address each of the Parameters.

Interested parties who participated in Stage One Market Testing, or who otherwise satisfy the criteria, are invited to register their interest to participate in Stage Two Market Testing, which will consist of written feedback and/or individual meetings, as outlined below. The criteria are:

  • Above rail operators, managers or below rail owners/operators with a current presence in the Australian freight rail market
  • International rail operators, managers or below rail owners/operators with a multinational presence and appetite for continued overseas investment
  • Construction contractors with a track record of appetite for major Australian rail, tunnel and civil works contracts
  • Infrastructure developers with a record of appetite for development of rail and transport infrastructure
  • Investors and lenders with a record of appetite for rail and transport infrastructure
  • Public sector agencies with transport/rail delivery expertise and influence over elements of Inland Rail.

Participants who have already signed a Confidentiality and Process Deed are only required to indicate their interest by emailing IRMarketTesting@macquarie.com. Parties who have not already signed a Confidentiality and Process Deed should include in their email a brief overview of their organisation to assist us in identifying whether they meet the criteria. Additional parties that are approved through the registration process for Stage Two Market Testing will be asked to sign a Confidentiality and Process Deed before participating.

Stage Two Market Testing is to be undertaken during January and February 2017. 

  • Interested parties who wish to participate can request an Information Brief and Questionnaire from IRMarketTesting@macquarie.com
  • Written responses to the Questionnaire are requested by Monday 6 February 2017 and should be provided by email. 
  • Interested parties who wish to meet to discuss their response to the Information Brief and Questionnaire should register their interest in doing so by Friday 3 February 2017.

Finance and its advisers will attempt to accommodate registered parties for meetings at times that are mutually convenient; however, given the limited timeframe, meetings may not be able to be held with all registered parties.

The Stage Two Market Testing process:

  • is not a request for expressions of interest to develop the Inland Rail
  • is not a procurement process and is not a pre-qualification for any procurement process.

Any person or organisation that does not participate in the Stage Two Market Testing process will not be prejudiced in respect of future consideration for participation in the Inland Rail programme. No reimbursement of costs will be paid to persons responding to the Stage Two Market Testing process. There is no intention to create a process contract with any participant that responds to the Stage Two Market Testing process.

Last updated: 17 January 2017