Sydney, Australia's Cross City Tunnel has been a nightmare for New South Wales officials forced to defend excessive fees and road closings designed to prop up the failing toll road before a parliamentary inquiry. The Sydney Daily Telegraph reported today that NSW Premier Morris Iemma is now considering buying out the private consortium that owns the A$680 toll tunnel for A$1 billion.

Although backers of the tunnel promised 90,000 motorists would use it daily, high tolls have limited the number of users to just 30,000. Local residents have also expressed outrage over road closures and changes to traffic signal timing designed to frustrate commuters into taking the tunnel.

Any deal would require the approval of the CrossCity Motorway consortium, which owns the tunnel for the next thirty years. The consortium features Cheung Kong Infrastructure, Bilfinger Berger BoT, and RREEF Infrastructure (the global infrastructure investment arm of Deutsche Asset Management).

California's model toll road system faced the same problems as the contract for the Riverside Freeway Express Lanes toll project prohibited expanding free roads nearby. A 1999 lawsuit confirmed that neither the legislature nor local authorities could do anything about the congestion caused by this "non-compete clause." The Orange County Transportation Authority had little choice but to pay $207.5 million in April 2002 to buy out the toll lanes that cost $139 million to build.