Safety 'not jeopardised' with Waratah deal

6 Feb 2012, 7:43 pm   -   Source: AAP
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The NSW government has assured commuters that a deal to prop up the Waratah train project won't compromise safety testing.

A deal to prop up the Reliance Rail consortium with an injection of $175 million won't jeopardise safety checks on the state's long-delayed Waratah trains, the NSW government says.

The public-private partnership signed by the former Labor government has been beset by delays and despite an initial 2010 delivery date for all 78 of the trains, only six are in service.

The government announced on Monday that in 2018 it would invest $175 million in the debt-laden Reliance Rail, to keep the $3.6 billion Waratah train project afloat.

Without the government stepping in, the project would have collapsed within hours, Treasurer Mike Baird said, exposing the state to $250 million in break costs and $1 billion in replacement funding.

The $175 million is conditional on the delivery of the Waratah trains and Reliance Rail's ability to refinance its existing debt at that time - and would give the state 100 per cent of the equity in the consortium.

But Mr Baird said by 2018, with the trains delivered, the state might not have to stump up the money, "because many players may well be interested in taking that equity position".

"In many respects it was doomed to fail from the beginning - it was too leveraged, too risky, and did not have the buffers in there to have contingencies for things that could go wrong," he told reporters on Monday.

"Today is an important milestone ... putting a financial floor, a bit of a foundation under this project, so confidence can return to the project, to ... get the trains on track as soon as we can."

Opposition Leader John Robertson described the government's intervention as a dud deal that could compromise the testing regime for the trains.

"My concern is that we've seen a compromise on the testing regime that's going to lead to trains that aren't safe and aren't reliable," Mr Robertson told reporters in Sydney.

"We know that this company has come and asked for a change to the testing regime.

"We can only assume the testing regime has been reduced and we're going to see trains that are neither safe nor reliable."

NSW Transport Minister Gladys Berejiklian rejected the safety claims, saying the previous requirements had been maintained and reliability testing enhanced under Monday's deal.

"We've actually imposed more strict reliability aspects," she said.

"This is to ensure we get a good product, a reliable product, to make sure commuters get what they have been promised for so many years."

If Reliance Rail adheres to its schedule, the last train is expected to be delivered to RailCorp by the end of 2014.

Ms Berejiklian would not guarantee the consortium would meet the delivery deadline.

"We'll obviously be working very closely to get those trains on the tracks," she said.

"But of course we know this project has huge challenges."

Downer EDI, which along with Royal Bank of Scotland and AMP Capital Investors is part of the Reliance Rail consortium, welcomed the NSW government's financial support of the Waratah train project.

"This agreement will provide Downer and its joint venture partner Hitachi with greater certainty going forward as we manufacture and maintain the Waratah trains," Downer chief executive Grant Fenn said in a statement.

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