Canberra Metro announced as Capital Metro light rail tender winner

Pacific Partnerships leads the consortium, with the trams supplied by Spanish company CAF and operated by German company Deutsche Bahn, for which the Canberra project signals its arrival into the Australian market.

The price is cheaper than the government's estimated $783 million and the construction timetable is shorter, with work to begin midway through this year and trams expected to begin taking passengers in early 2019.

The Canberra Metro consortium beat out the Activate consortium led by Downer EDI and including Bombardier and Keolis Downer, Australia's biggest operator of trams, including Melbourne's network. An Activate spokesman declined to comment.

Capital Metro Minister Simon Corbell would not say whether Canberra Metro's $698 million bid was cheaper than the other bid, but said it was the "most competitive", with other factors than price taken into account.

Nor would Mr Corbell say how much the consortium would be paid each year for the 20-year term of the contract, beyond saying it would be "considerably cheaper" than the $80-$100 million figure suggested by commentators. The amount would be confirmed in detailed contract negotiations in the coming months.

Mr Corbell confirmed the consortium would be paid a lump sum when construction was complete, in line with the budgeted figure of $375 million.

Monday's announcement has left hanging the question of an extension from the city to the Russell Defence precinct. Chief Minister Andrew Barr confirmed the consortium had put a price tag to the government for the extra 3.2 kilometres of line, but said no decisions would be made till later in the year.

The announcement sets up an election year fight, with the Liberal opposition vowing to scrap the project if it wins government in October, even though construction will be underway.

Liberal transport spokesman Alistair Coe dismissed the announcement as "disgraceful", saying the government should not sign contracts for such a "deeply unpopular" project so close to the election, but should wait for a mandate from voters.

Serious questions remained about the rate of finance, repayment information, the scope of the works and the government's contribution to construction, he said.

Bid chairman Mark Lynch, from Pacific Partnerships, estimates 500 people will be employed over the construction period. He said, excluding the 14 trams, two-thirds of goods and services during construction would come from the Canberra region. Ninety per cent of the construction workforce and three-quarters of the operations workforce would come from the region.

Mr Corbell said the consortium would provide 60 apprenticeships and traineeships, places for 10 graduates, and more than 40 placements for University of NSW Australian Defence Force Academy engineering students.

The winning bidder had agreed to remove the Northbourne Avenue trees in stages, with no section bare for more than three or four months, addressing a concern of the National Capital Authority. New trees would be planted at 4 metres height.

The winning consortium is made up of eight companies, four of which will have an equity stake in the project.

Other than Pacific Partnerships, the government would not detail the project shares:

Mr Corbell said the $698 million price showed the government had been "cautious conservative and robust" in its estimates.

"While the final cost will be confirmed when contracts are signed, the capital cost included in the winning bid is $698 million, with a variance of 5 per cent depending on contract negotiations and changes in market conditions between now and contract closure," he said.

At the last election, the 12km tram line was priced at $614 million, and in 2014 then chief minister Katy Gallagher said Cabinet's "tolerance" remained at $614 million, adjusted for inflation. By the time the business case was published in October 2014, the price had swollen to $783 million, described then as $610 million plus a $173 million "contingency".

The development application for the Gungahlin line, the first stage of a long-term plan to extend the tramline across the city, was approved last month.