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Railtrack shies away from deep Tube tunnels

LONDON UNDERGROUND's network of tunnels and track looks almost certain to be broken up when operated in the private sector, following an admission this week by Railtrack that it only wants to run the shallow sub-surface lines.

Railtrack directors revealed on Thursday that the company was 'most interested' in the shallow Metropolitan, District, Circle, and Hammersmith & City lines. They added that the company would only get involved with privately funded upgrade plans if it considered them 'advantageous to Railtrack shareholders'.

Speaking after a presentation of Railtrack's interim results, chief executive Gerald Corbett said: 'The sub-surface lines can be integrated most easily with our lines and open up a whole host of new transport options.'

Project finance and transport experts believe Corbett's comments effectively confirm that the system will now have to be split into three infrastructure packages when the maintenance and operation of the Underground is offered to the private sector in spring 2000.

A senior banker involved in bidding for the project claimed: 'Railtrack is the only group that could seriously be considered for running the whole network. There are some very credible consortia being formed, but my impression is that they only have the appetite for one of three packages.'

LUL maintains that there are 'five or more consortia out there' with sufficient financial clout to compete with Railtrack. But experts believe that Railtrack is being encouraged by the Treasury only to take on sub- surface lines because it regards three infrastructure packages as a surer way to provide the best value for money.

The current front-runners for the two expected deep-line packages are Brown & Root/Amec/ Tarmac/Alstom, and a Balfour Beatty/WS Atkins/Adtranz consortium.

Other consortia which do not contain rolling stock manufacturers, including Mowlem/ Alcatel and Alfred McAlpine/ Westinghouse, are seen as less credible since 'infrastructure' will include trains as well as tunnels, track, signalling and stations. However, ABB Daimler-Benz, Bombardier and Siemens are understood to be unattached and still in talks with big-name contractors.

Prequalification notices for the privatisation were expected to be published this month. But LUL is said to be two months behind after finding the exercise more difficult than expected. The Treasury, LUL and Department of the Environment, Transport and the Regions are still understood to be arguing over the best financial and management structure for the network.

'LUL wants a structure that allows it to retain leadership and it is not allowing much transfer of risk [compared to other private finance schemes]. There has been an awful lot of continuing informal discussion but no formal feedback, so the uncertainty is still very clearly there,' said one bidder.

(See Commentary page 8)

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