Spain and France lodge East West Link cancellation protest

The Australian: Spain and France lodge East West Link cancellation protest. Rick Wallace 14 April 2015

The governments of France and Spain have confirmed they have made direct complaints to the Victorian government over its treatment of the tenderers — Bouygues and Acciona — for the state’s East West Link toll road project.

French ambassador Christophe Lecourtier and the Spanish embassy made a joint protest to the Andrews Labor government over the cancellation of the project.

France’s Bouygues and Spain’s Acciona were among the five members of the consortium awarded the contract to build the toll road project in the last weeks of the Napthine Coalition government.

“Given the cancellation of the East West Link project and the implication that this has for the French company Bouygues, I can confirm to you that I have been in contact with the Victorian government in order to find a way to resolve the situation,” Mr Lecourtier told The Australian.

The Spanish embassy confirmed that it had joined with the French in tackling the Andrews government over the cancellation. The complaints come amid claims new Premier Daniel Andrews’s cancellation of the project — and the government’s subsequent threats to pass legislation to nullify any bid for compensation — have created a sovereign risk issue in Victoria that will deter future investment.

Federal Trade Minister Andrew Robb said last month that he had been approached by international investors at a forum in Hong Kong, and during his travels in other countries, concerned about sovereign risk in Australia after the contract cancellation.

“The fact of the matter is, we’re being tarnished — our reputation as a safe haven, as a place to get a solid return, to be predictable with regulations and all of the rest,’’ he said.

“Now they’re saying to me, ‘What is the paper worth on which these contracts are being signed if premiers are going to rip up the contracts and then potentially legislate for no compensation?’”

The Andrews government, which is in negotiations to end the compensation battle with the East West Link tenderers, insists the contract for the project was flawed and it was within its right to pull the pin. It also says the project was poor value for money and did not stack up financially. It will instead proceed with its plan to eliminate 50 level crossings in Melbourne.

Drawn-out negotiations over the level of compensation payable to the consortium are rumoured to be moving closer to a settlement, with expectations of a $500 million-plus payout, despite pre-election comments from Mr Andrews that no compensation would be paid.

A spokesman for Mr Andrews said: “Many parties have made representations to the Victorian government over the Liberals botched and financially reckless East West link. Our first priority is to the Victorian community and protecting taxpayers from this project that would have lost 55c in every dollar spent on it.”

It is believed the government is seeking to finalise settlement before the state budget is handed down on May 5.

Neither Bouygues nor Acciona would comment, but Acciona has described the cancellation of the project as a “worrying turn of events”.

“We are a global company and we accept that governments sometimes cancel projects,” the company has been quoted as saying. “What is unprecedented in the Australian context is that a new government should refuse to honour a contract signed by its predecessor … it has increased the risk and costs of doing business in Australia.”

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