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Railtrack keeps option on CTRL Section 1

RAILTRACK WAS told this week that it still had the rights to the concession to operate Section 1 of the Channel Tunnel Rail Link (CTRL).

But transport secretary Stephen Byers imposed conditions on the concession and warned its agreement to guarantee £400M of loans to project promoter London & Continental Railways (LCR) could reduce the concession value.

Under agreements made in 1998, Railtrack Group has the option to purchase an 83 year lease to operate CTRL Section 1, which runs from the Channel Tunnel to Ebbsfleet in Kent. It also has the right to collect track access charges.

Trading in Railtrack Group shares was last week suspended when Byers put its main subsidiary, Railtrack plc, into administration (News last week).

Railtrack Group will now decide whether to sell its option on the lease, or take up the option and operate CTRL.

Selling the option could raise money to help pay off shareholders faced with the loss of their investment following the track operator's collapse.

Railtrack estimates that over the period of the lease, access charges from Section 1 would be worth £400M at today's prices.

Byers this week agreed not to terminate the agreement but said in a letter to Railtrack that the track operator would have to ensure that Section 1 is built and ownership rights are transferred to another company.

He also warned that Railtrack would be unable to realise the value of its involvement in CTRL until the first phase was completed in 2003.

It is estimated that the Section 1 lease will be worth £1.7bn once the line is operational.

Money raised by LCR from the sale of the lease for Section 1 to Railtrack will be used to fund the construction of CTRL phase two.

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