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Railtrack set to take on CTRL without rebidding

DEPUTY PRIME Minister John Prescott could hand the £5.4bn Channel Tunnel Rail Link to Railtrack next month without reopening the bidding process, it emerged this week.

A government spokesman said on Tuesday that if no other bidders for the project emerged, the government could hand over the project without putting it back out to competitive tender.

But according to contractors, even a swift handover is likely to delay the start of construction on the project by as much as a year, as the new operator sets up its own management system.

A senior project manager for one of the contractors bidding for tunnelling work confirmed that a serious delay was inevitable: 'My view is a minimum of six months, probably more than a year.'

The prospect of Railtrack taking over the CTRL became increasingly likely last week after the Deputy Prime Minister announced he had rejected a request for £1.2bn of extra public funding for the project.

LCR activated a clause in the CTRL concession under which it has 30 days to come up with a solution to the funding crisis which has engulfed the project.

If this fails, the project will be handed back to the government which will decide whether to scrap the project, build it with public money or - more likely - bring in another private investor to build and operate the link.

But the DETR said the government will reopen the competition to build the link only if other companies express an interest in saving the project. A spokeswoman said: 'There is no legal requirement for a competition. Whether we hold a competition or not depends on the requests coming in. We've also had interest from Eurorail and Kvrner.'

Railtrack this week confirmed it was considering rescuing the project and added that a phased construction programme was an option. 'We met with our advisors on Monday and asked them to look at the options, one of which was to construct the line from Folkestone to Ebbsfleet and leave the London tunnels until the revenue streams are looking better,' said a spokesman.

Prescott's dramatic announcement has thrown LCR's shareholders into turmoil. This week they were frantically looking for a way to carry on with the project. No clear solution had emerged as NCE went to press.

LCR's engineering shareholders Bechtel, Ove Arup & Partners, Halcrow and Systra, are understood to be actively considering ways of maintaining their involvement in the project, with or without LCR.

The four are also shareholders in Rail Link Engineering which employs 850 of their staff on secondment. Railtrack could absorb RLE and its design expertise as part of a rescue deal.

But handing CTRL over to Railtrack would almost certainly mean increasing the public subsidy for the troubled project. It would also involve re- nationalising the loss making Eurostar train service.

City sources said Railtrack would only rescue CTRL at a price. It is expected that Railtrack will demand a relaxation of government-imposed deadlines for its 10 year, £16bn investment programme.

Andrew Bolton, Jackie Whitelaw and Matthew Jones

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