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Thames Tunnel costs rise again to hit £4.1bn

The cost of the Thames Tunnel mega-sewer project beneath London has risen again from £3.6bn to £4.1bn, more than double the original estimate of £2bn, Thames Water confirmed today.

Thames Water said last year that the project cost had risen from £2bn — a figure reached in 2006 — to £3.6bn for its preferred tunnel route. The company said the project will be paid for by customers through their bills from 2013 at the earliest, at a price of £70 to £80 per year for each customer. It said this would only bring its wastewater prices up to the national average.

Environment secretary Richard Benyon said the rise in cost was attributable to changes including greater use of brownfield sites and river transport in response to the first phase of public consultation, development of construction plans, and allowances being made for a later completion date. The £3.6bn figure was at 2008 prices and exluded financing costs, he said.

The new cost estimate has been examined and approved by independent advisers on behalf of water regulator Ofwat and the figure includes £0.9bn of “risk allowance and optimism bias”, Benyon said.

Completion pushed back

Benyon also announced that the completion date for the tunnel has been pushed back from 2020 to as late as 2023.

“As the parties have worked through the issues relating to planning, financing, procurement and regulation of the project it has become clear while construction time remains at six years, the 2020 date is unrealistic,” Benyon said.

A source close to the project told NCE this week that postponements to the second phase of consultation — which begins today — combined with a lack of precedent for the duration of Infrastructure Planning Commission processes have made it more difficult to predict viable timings for the project.

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