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Metronet seeks to scrape back £1bn overspend

Metronet today confirmed that it has requested the PPP Arbiter to step in and determine who is liable for £1bn in additional costs - Metronet or London Underground.
The Extraordinary Review process is a part of the PPP Contract. Metronet wants to recover £992 million from London Underground.Metronet has also asked the PPP Arbiter to conduct an 'Interim Determination', which could force London Underground to increase its four-weekly Infrastructure Service Charge (ISC) payments to Metronet within the next six weeks.Statutory Arbiter Chris Bolt confirmed that he had received the request for Extraordinary Review from Metronet, and he would look at two questions: - What level of costs would be incurred, and what level of performance revenue earned, by Metronet in performing its obligations in an efficient and economic manner, in accordance with good industry practice. - What change in the amount and timing of infrastructure service charge can be appropriately paid by London Underground.'Metronet is seeking additional payment of £992M for BCV alone,' added Bolt.Metronet BCV is the tube contractor responsible for the Bakerloo, Central, Victoria and Waterloo and City lines. 'This reflects projected cost increases which are more than double those estimated last year,' said Bolt.London Underground responded to Metronet's request by releasing a staement saying: 'London Underground believes that Metronet has not provided evidence to date that any additional payments would have been required by a competent organisation. It therefore remains of the belief that Metronet's projected cost overrun should be largely or entirely borne by it and its shareholders.'Bolt said that he hoped to publish a draft decision on the extraordinary review before Christmas and expected an additional request from Metronet SSL, the tube contractor for the circle, district, metropolitan, and hammersmith and city lines.He added that he would also publish a draft direction on altering the ISC charges in the week beginning 16th July. Metronet is seeking cost adjustments of up to £400M to cover the coming 12 months.

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