The Government will begin market discussions with international and local toll road investors next week as it explores using private sector concessions to fund, build and operate key pieces of transport infrastructure.
Infrastructure and Transport Minister Chris Bishop confirmed the process, known as “market sounding”, would involve financiers, operators, and iwi partners both here and overseas, as the Government looks to accelerate delivery of vital transport projects through alternative funding models.
“The Government is focused on improving high-quality road infrastructure to boost economic growth and ensure people and freight can travel efficiently and safely,” Bishop says.
“To accelerate the delivery of vital transport projects, we’re looking into alternative funding and financing methods, including the use of toll concessions.”
New Zealand currently has three toll roads in operation – Auckland’s Northern Gateway and two in Tauranga – and three more in planning or under construction. The Government has also signalled in its 2024 Government Policy Statement on Land Transport that tolling will be considered for all future Roads of National Significance (RoNS).
“Although existing toll roads are currently managed by the NZ Transport Agency, the Government is, for the first time, considering private sector involvement in the operation of toll roads. This includes the potential use of toll concessions as part of a broader approach to infrastructure delivery,” Bishop says.
Under the model being explored, a private concessionaire would manage and maintain a toll road for a set period, collecting toll revenue to cover costs and earn a return on investment. In return, the Government would receive an upfront capital payment to help deliver additional projects sooner.
“A toll concession involves a private entity—known as a concessionaire—being given the right to manage and maintain a toll road for a specified time. During this period, they collect toll revenue to recover costs and earn a return. In exchange, the Government receives an upfront capital payment which can be used to fund additional road projects and potentially deliver them years earlier than would otherwise be feasible.”
Concessions could apply to both existing and new roads, with options to bundle design, construction, operations, and maintenance under one private partner.
“There are several advantages to toll concessions: they can provide immediate capital that can be used to deliver more infrastructure projects sooner, draw on private sector expertise and innovation in areas like construction and tolling technology, and can help government to share and manage risks more efficiently.”
Importantly, Bishop said ownership of toll roads would remain with the Crown.
“It is important to note that the Crown continues to own the toll road under a concession arrangement. The private operator manages the road for the duration of the concession, after which control reverts back to a government agency.”
Market discussions will test the viability of the concession approach and what models may best suit New Zealand’s transport needs.
“Next week, my officials will begin market sounding discussions with toll road investors, operators and financiers to test opportunities for private firms to operate and maintain toll roads through concessions. The officials will meet with a cross-section of market participants – from international toll road operators to domestic and international investors and iwi – to get a range of perspectives on the opportunities available. If work on concessions is taken forward, there will be wider opportunities to be involved in any transactions stage.”
Bishop says the Government would explore the concession model on:
- Existing toll roads: Northern Gateway (Auckland), Takitimu Drive and Tauranga Eastern Link (Tauranga)
- Roads confirmed for future tolling: Penlink, Takitimu North Link, and Ōtaki to north of Levin
- All future Roads of National Significance
Officials will also look at whether private investment could support other major projects, such as the alternative Waitematā Harbour crossing.
“The Ministry of Transport has appointed global investment bank, Citi, as its financial and commercial advisor to support this market sounding process.
“Citi has extensive experience advising on toll road concessions overseas and we’re pleased to have access to their expertise, connections and insights to ensure we run a high calibre market sounding process.
“The insights we get from the market sounding will inform my decisions about whether and how to take toll concessions forward, including which ones are viable and have value. I look forward to hearing what the market has to say,” Bishop says.
Decisions on the use of toll road concessions are expected later this year.
