Government Signs $3.65B PPP Agreement for Northland Expressway Warkworth to Te Hana

The Government has signed a public-private partnership (PPP) agreement to deliver the first section of the Northland Expressway – Warkworth to Te Hana – starting one of New Zealand’s most significant infrastructure projects, Transport Minister Chris Bishop has announced.

The Project Agreement was signed this week between the Crown and the Northway consortium to design, build, finance, maintain and operate the expressway, and reached financial close today.

Detailed design, site mobilisation and early construction works are expected to begin in the coming months.

Northland has incredible potential and Warkworth to Te Hana is one of the most significant infrastructure investments this Government is making to support jobs, unlock economic growth, and provide a safer, more resilient connection for people and freight between Auckland and Northland, Mr Bishop says.

The scope includes a new 26-kilometre, four-lane expressway with grade-separated interchanges at Warkworth, Wellsford and Te Hana. It also includes 15 standardised bridges, two underpasses, numerous large culverts, 12 wetland stormwater treatment basins, and twin tunnels of around one kilometre through Kraack Hill above the Dome Valley near Dome Forest.

Over the life of the expressway, the benefits are expected to include 145 fewer deaths and serious injuries, travel time savings of seven to ten minutes per vehicle, more than 1,000 fewer closure hours caused by unexpected events such as severe weather, and the removal of around 1,000 heavy vehicles a day from the existing SH1 main streets through Wellsford and Te Hana.

Following strong interest in the Northland Expressway at our Infrastructure Investment Summit in March last year, three competitive consortia were shortlisted by the New Zealand Transport Agency (NZTA) to deliver the first section. The Northway consortium was confirmed as the preferred bidder in May this year.

This PPP represents good value for taxpayers. The final project cost has a net present value (NPV) of $3.649 billion, around $251 million below the $3.9 billion Public Sector Comparator approved by Cabinet in March last year, which estimates what the project would cost under traditional public sector procurement.Every dollar invested is also expected to return $1.60 in wider economic benefits to New Zealand.

Warkworth to Te Hana is the largest public-private partnership in New Zealand's history and demonstrates the benefits that well-structured, highly competitive PPPs can deliver. Lessons from previous PPPs, including Transmission Gully, along with international best practice and market feedback, have been incorporated from the outset.

This has included a more sophisticated approach to allocating risk, securing property and resource consents earlier, and establishing a stronger evidence base for setting affordability thresholds.

The procurement process was also strengthened through bid cost reimbursement to encourage competitive participation, NZTA retaining intellectual property, price evaluation during the Request for Proposal stage, and an optimisation phase to maintain competitive tension between the final bidders.

Ultimately, the Northway consortium put forward the strongest overall proposal, providing the best balance of price, quality and risk. The agreement provides greater certainty over costs, reduces the risk of disputes and delays during construction, and delivers better value for taxpayers over its lifetime.

A PPP is like getting a mortgage to buy a house. Rather than paying the full cost upfront, it is spread over a longer period and repaid over time. But a PPP goes further than financing alone. The private partner is also responsible for designing and building the road, maintaining it, and meeting agreed performance standards throughout the life of the contract.

In August 2025, Cabinet agreed to a Crown Capital Contribution (CCC) towards construction of the project. The Government provided NZTA with a $1.6 billion, 10-year loan to finance the contribution. NZTA will make these payments to the contractor during the latter stages of construction, beginning from 1 July 2028 (FY2029).

NZTA will also begin making regular Unitary Charge payments once the road opens. These payments are linked to agreed performance, safety, maintenance and availability standards, helping protect value for taxpayers over the 25-year operating period. Financial deductions apply if those standards or KPIs are not met, Mr Bishop says.

Delivering wider employment and economic development benefits for Northland is also critically important. The Northway consortium expects around 60 per cent of total physical works spending to flow through local supply chains, creating opportunities for local subcontractors across earthworks, drainage, pavements, bridges and other civil engineering works.

In addition, Northway has indicated it will create youth and graduate opportunities through internships, graduate roles, apprenticeships and school-to-work pathways, with a focus on local young people, including Māori and Pasifika. These opportunities will be backed by training, mentoring and pastoral support to help participants gain skills, qualifications and pathways into long-term infrastructure careers.

I want to thank the unsuccessful bidders for their strong participation in a robust and competitive procurement process and congratulate the Northway consortium on its successful bid. I look forward to joining them on site in the coming months to celebrate design and construction getting underway.

Northland has incredible potential, and today's agreement is a major milestone in unlocking the infrastructure, jobs and economic growth the region deserves.

Notes for editors: In July 2024, Cabinet agreed in principle to use an Accelerated Delivery Strategy to deliver the Northland Corridor, including a PPP procurement for Section 1, Warkworth to Te Hana.

In March 2025, Cabinet endorsed the Implementation Investment Case and approved NZTA to commence procurement of the project through a PPP.

In August 2025, Cabinet agreed for NZTA to contribute a Crown Capital Contribution (CCC) to the construction of the project. Cabinet also agreed to provide NZTA with a $1.6 billion 10-year loan to finance the CCC and appropriated funding for the loan.

The CCC reduced the required private capital for the Warkworth to Te Hana project. This ensured that the Request for Proposals (RFP) procurement process was competitive and reduced the amount of private debt required by each bidder, especially given the debt market capacity for such a large project.

The CCC also struck a balance between retaining sufficient transfer of risk from the Crown to the PPP consortia and taking advantage of the Crown’s lower cost of capital. All these considerations are consistent with the Treasury PPP Policy Guidance which sets out the factors and trade-offs that should considered when assessing the need for a CCC.

The CCC payments can only be used on direct Project construction costs, and not indirect Contractor costs. Mechanisms are in place to ensure that risk is appropriately managed through the construction phase.

A Gateway 3 Review was conducted between 4 - 8 May 2026. This focused on the procurement process and preparation for Financial Close and delivery. The review resulted in a Green/Amber delivery confidence assessment, with seven recommendations. NZTA accepted all recommendations in full and will or has already actioned them.

In June 2026, Cabinet approved the project to enable NZTA to proceed to financial close. Financial close occurred on Thursday 30 July. Financial Close means the financial conditions of the Agreement have been met and is when the construction capital becomes available.

The Northway consortium comprises Acciona Concesiones SL, Global Sustainable Infrastructure GP IV Ltd and Acciona Construction New Zealand Ltd, alongside strong New Zealand partners including Downer New Zealand and AECOM.

Construction planning, mobilisation, detailed design, and early works are due to commence from August 2026, with main construction starting in November 2027. The road is expected to open in 2033 and full works are expected to be completed in 2034.

The ongoing Unitary Charge (UC) payments over the 25-year term of the Agreement cover financing (debt and equity), operations and maintenance, performance adjustments, and insurance and lifecycle costs.

Financial deductions to the UC payments apply if the road is closed during the operational period or if Key Performance Indicators (KPIs) are not met.

Potential KPI deductions support performance outcomes across safety hazard management, incident response, asset management, reporting, compliance, communication, and environmental obligations.

The terms of the Project Agreement expire in 2058, and the road will be handed back to NZTA at the conclusion.