Two years after large sinkholes opened above the construction of a $3.1bn Sydney motorway tunnel, the consortium charged with the project’s completion has been issued a notice forcing it to continue the job or face possible legal consequences.

The New South Wales roads minister, Jenny Aitchison, said contractor CGU had on Monday been issued a “notice of default”, forcing it to recommence work on the 90% complete M6 tunnel by 1 May.

Excavation on the tunnel in Kogarah had been on hold since the sinkholes formed in March 2024 and a “challenging” geological feature was discovered close by, with works eventually grinding to a halt last June after the contractor claimed a design solution could not be achieved.

The NSW premier, Chris Minns, criticised the unilateral move to down tools, claiming the contractor remained responsible for designing and building the tunnels.

Aitchison said the government had taken “decisive action” after attempting to remedy the impasse, including by presenting an engineering solution to CGU, a joint venture of CPB, Ghella and UGL.

_{Sign up: AU Breaking News email}

“Transport for NSW has issued a notice of default to CGU after more than two years of work to try to resolve the issues affecting this project,” she said in a statement on Monday.

“The Department has made clear there is a technical solution available within the current contract – and it is a reasonable community expectation that it is delivered.”

The new twin 4km tunnels, connecting Sydney’s south to the wider motorway network, were approved in 2019 and scheduled to open in 2025. That date was pushed back to 2028 after the sinkholes opened, then workers discovered a “high-angle reverse fault” in the bedrock in the same 245-metre section of the project.

In NSW transport estimates on Tuesday, Aitchison said CGU had concerns it could not deliver the project safely and viably but she expected the company to meet its obligations.

“We are holding the contractor to account to their commitments that they made when they signed the contract,” she told the committee.

“I’m hopeful that we can come to a resolution.”

She said she could not provide information about additional costs or a possible finishing date because of ongoing legal negotiations, but the premier had previously ruled out spending any additional money on the project.

Nor had the contractor approached her office to make a formal request for more funding for the project, she said.

Minns ruled out any further funding on Tuesday when asked whether the government may need to compromise if CGU was unable to cover the “additional $1.5bn required to fix the tunnels”.

“No. This contractor … took the risk on design and they took the risk on construction,” he told reporters.

“I’m sorry it hasn’t worked out but, at the end of the day, they have to make good on it – they’re a big international infrastructure company, they signed a deal with the NSW government. I promise you, if they came in under budget they wouldn’t be sending us a cheque back, so they’re going to have to step up.”

When asked by the Nationals MLC Nichole Overall whether the government was “prepared to let the project collapse, effectively letting a $3.1bn project turn into a white elephant”, the minister said she would not prejudice legal discussions “with comments made here to satisfy your scaremongering”.

The NSW government has so far spent $5m on legal fees in the dispute, the committee heard.

CPB, as lead contractor for CGU, was approached for a response.