Cross City Tunnel in administration

Sydney's Cross City Tunnel has financially failed for the second time in eight years, entering voluntary administration on Friday afternoon.

The decision by its owners to appoint administrators follows the decision of the NSW Office of State Revenue to pursue an unpaid $64 million tax bill.

Motorists will not notice a change because the administrators, David Merryweather and Gregory Hall of PricewaterhouseCoopers, are to maintain the $4.91 one-way toll for the motorway, which is now likely to be put up for sale.

The controversial tunnel from Darling Harbour to Rushcutters Bay opened in 2005 amid predictions by its first owners that it would soon attract 70,000 motorists a day.

But only about 20,000 motorists used the city bypass tunnel in 2005, and it is estimated that fewer than 40,000 a day use it now.

After it went into receivership in 2006, the present owners – Royal Bank of Scotland, EISER Infrastructure Partners and Leighton Contractors – bought it in 2007.

The government insists they should have paid stamp duty on that transaction but last month those owners won a case in the NSW Supreme Court saying they did not need to.

When the Office of State Revenue said it would appeal that decision this week, it cruelled the chances of the motorway extending its bank loans. “Naturally we are disappointed at this outcome," said the chairman, Ed Sandrejko. He blamed its demise on the refusal of the previous government to funnel enough traffic into it.

“While a range of factors caused the original receivership, there was a significant impact on profitability due to the previous government's decision to alter without compensation the surrounding traffic arrangements in contravention of the contractual arrangements," Mr Sandrejko said.

"This has continued to affect the balance sheet since we acquired the asset," he said.

"We have sought to put the business on a sustainable footing and have succeeded in this, reducing costs and seeing modest but promising traffic growth. We believe we have run a safe and efficient asset on behalf of motorists."

The tunnel has been controversial since the contract for its construction was signed in 2002. The former Labor government said it would help remove traffic from the CBD but that largely did not eventuate.

Motorists resented the hefty toll for the relatively short bypass; were alarmed when the government said it would close alternative routes to the tunnel; and were sceptical of the $100 million upfront payment to the former Roads and Traffic Authority by the road's proponents.

This week, a "CBD access strategy" released by the government said it would be good if the tunnel "could play a more important and useful role in diverting through traffic away from city centre streets".

But the strategy offered no ways to make this happen.

A spokeswoman for Roads Minister Duncan Gay said: "Even though Cross City Motorway Pty Ltd has gone into voluntary administration it is still required to operate and run the motorway.

"The tunnel will remain open and continuing operating with tolls at the existing rate.

"CrossCity Motorway Pty Ltd will advise the government of future plans in due course."

This story Cross City Tunnel in administration first appeared on The Sydney Morning Herald.