Victoria signs $3.6b contract for Suburban Rail Loop

The Victorian government is pushing ahead with the Suburban Rail Loop, signing the project's first major works contract.

Victorian Transport Infrastructure Minister Jacinta Allan speaks to media during a Suburban Rail Loop press conference in Clayton, Melbourne, Thursday, June 2, 2022. Image AAP

A multibillion-dollar construction deal has been brokered to begin tunnelling on Melbourne's mammoth Suburban Rail Loop.

Premier Jacinta Allan and Transport Infrastructure Minister Danny Pearson will announce the first major works contract for the $34.5 billion eastern section of the rail line on Tuesday morning.

It is worth $3.6 billion and involves tunnelling 16km of the 26km section between Cheltenham and Box Hill, the Herald Sun reports.

The contract has been awarded to consortium CPB Contractors, Ghella and Acciona Construction, with digging expected to start by 2026.

The entire 90km orbital rail line is slated to run from Cheltenham to Werribee via Melbourne Airport.

It became a contentious issue before the 2022 state election, with the opposition threatening to shelve the project if it took government.

The rail loop was unveiled by the Andrews Labor government as a major election policy in 2018 and the entire project was initially estimated to cost up to $50 billion.

A 400-page business and investment case released in 2021 showed the east and northeast sections could cost up to $50.5 billion.

The state's independent Parliamentary Budget Office in 2022 estimated the first two sections would cost $125 billion.

Victorian Ombudsman Deborah Glass on Wednesday took aim at the project, finding it was conceived by a single executive and handled by private consultants under a veil of secrecy.

The Victorian Coalition is opposed to this project preferring a policy of a Tullamarine Airport rail link and upgrades to regional freight rail networks.