RAILTRACK WILL be unable to buy Section One of the Channel Tunnel Rail Link, the Department of Transport, Local Government and the Regions (DTLR) confirmed this week.
Failure to sell the part-completed route from Folkestone to Ebbsfleet in Kent by October 2003 could compromise the financing of the remainder of the project.
Proceeds from the £1.7bn sale were intended to partly fund Section Two of the scheme, from Ebbsfleet to London St Pancras.
This week project promoter London & Continental Railways said that it would be able to raise the funds itself.
'We don't actually need Railtrack, ' said LCR treasurer Mark Bayley, adding that the company is now looking at borrowing the money, as Railtrack had previously planned.
Until recently LCR had been forced to rely on Railtrack's promise to buy section one, because it was too financially weak to bear construction risk (NCE 11 June 1998). Risks of cost overruns on section two are covered by insurance.
Now that section one is more than 80% complete this risk has largely fallen away, strengthening LCR's ability to raise its own finance.
LCR is expected to use track access charges as security for borrowings which will also go towards paying off £700M worth of Railtrack guaranteed bank loans.