TRANSPORT PROJECTS in London face cancellation because of government plans to part-privatise London's underground system, Transport for London (TfL) said this week.
The transport body's ability to raise finance for transport projects like bus improvements may be reduced because uncertainties surrounding the Public Private Partnership for the Tube are affecting its credit rating.
TfL is to take over the Underground once contracts for the privately financed upgrade are signed.
'Our credit rating could be undermined by taking on London Underground under PublicPrivate Partnership (PPP), ' said a TfL spokesman.
Last week TfL's credit rating was lowered from AA stable to AA negative by credit agency Standard & Poor's (S&P). 'Negative' indicates that a future rating downgrade is likely.
S&P said it had changed TfL's rating because the scope of the PPP plans was unclear and signing of the contracts delayed.
Uncertainties about the liabilities, financial arrangements and project timetable for the Underground could undermine TfL's financial credibility, creating problems for other projects.
S&P also added that ongoing arguments between TfL and the government over the PPP have created a 'climate of distrust' between TfL and London Underground management.
This could result in 'an adversarial approach to managing the contracts, which could increase the risk profile to both private sector operators and TfL'.
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