US CONSTRUCTION giant Bechtel is to take over the building of section 2 of the Channel Tunnel Rail Link in a deal between the Government and London & Continental Railways (LCR).
Railtrack has dropped its option to purchase section 2, while Bechtel will take over management of the construction.
This relieves Railtrack of shouldering the risks of costs spiralling on the section, which involves complex geotechnical works beneath north London.
Instead Bechtel, part of the LCR consortium which is delivering the link, and Rail Link Engineering, which is designing it, swung the deal by agreeing to underwrite these risks up to £600M.
Bechtel rail division managing director Mike Adams said: 'Railtrack's financial position was being discussed a number of months ago regarding its ability to complete section 2.We were already around which is why this deal has been done.'
Railtrack chief executive Steve Marshall said: 'There was never really a way we were going to exercise our option over section 2.We have a £10bn construction exposure already.'
Bechtel will fund the risk through the insurance market and will receive an undisclosed payment, still under discussion.
'Bechtel has played a very important role, particularly with regard to the insurance arrangements. It has the clout to get the best deals, ' said Mark Bostock, a director of Bechtel's RLE partner Arup.
The deal removes the final uncertainty surrounding the project, on which £800M of contracts have already been signed. Construction is due to start in July. Railtrack will continue to provide engineering assistance.