Michael Pascoe writes:

There might be political light at the end
of the Cross City Tunnel for NSW Premier Dilemma if his government is smart enough
to play the tunnel’s owners right. On form, you’d have to doubt that very much,
but there is a chance.

The opportunity comes from the tunnel being
just as big a problem for the owners as it is for Dilemma. According to the
Terror
,
halving the toll only increased morning traffic by 10 to 13% yesterday
– which leaves the business as a loss-making operation.

Half a day’s figures of course don’t mean
much, but they add to the belief that the tunnel’s owners simply got it wrong –
the cross city traffic simply isn’t there at the right volume and price to make
a profit. That’s the conclusion the hard heads at MTAA Super came to when
deciding not to invest in the project.

The owners’ best chance of making a profit
is for Dilemma to get desperate and make road changes that would trigger
compensation payments at the inflated rate of the tunnel’s projected
worth. The way Dilemma is talking about
not blowing taxpayers’ money, it sounds like he might actually realise this.

The opportunity, if Dilemma can hold his
nerve as the tunnel sore festers, is that the tunnel owners realise they’d be
better off just negotiating to get out of the thing at cost. Sell the dud tunnel
at the construction price to the dud government and walk away.

Buying the tunnel back at cost would look
OK for Dilemma going into an election – it could even be spun positively as the
government taking back control of NSW’s infrastructure and future and flying
pigs etc. In the meantime though, it’s going to be an interesting game of
chicken for both parties leading up to that point – and that’s if they both
have the required smarts.

Meanwhile, there’s another way the
Macquarie-led Eastern Distributor investors seem to be benefiting from the
Cross City Tunnel on top of the extra traffic we reported yesterday – with the cross-eyed tunnel making electronic
passes compulsory, the Eastern Distributor’s non-cash transactions have jumped
from 58% to 67%. Nice.

Peter Fray

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