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Tube contracts changed to limit Kiley's control over PPP

NEWS

LONDON'S TRANSPORT commissioner Bob Kiley fears plans to upgrade the Underground with private finance are being changed to restrict his influence over the project.

He fears that new clauses will also allow contractors on the £13bn public private partnership (PPP) projects to walk away and claim 30 years' profit as compensation.

Transport for London (TfL) chief Kiley will become responsible for the Tube after the contracts are signed in March.

Kiley expressed his fears in a letter to London Transport chairman Malcolm Bates earlier this month and seen this week by NCE.

The letter says that the changes will allow contractors to walk away if they can prove Kiley has subjected them to 'unreasonable behaviour'.

Kiley's letter adds that the new clause is 'bizarre and risky' because the term 'unreasonable' could be exploited by contractors.

It also says that contractors could take 30 years' projected profits with them after walking away if an arbiter decides that TfL has been 'unreasonable' twice in two years.

London Underground (LUL) described 'unreasonable behaviour' this week as 'circumstances where LUL (under TfL) can't or won't, for whatever reason, perform under its contractual obligations.'

But Kiley's letter says: '(The clause) is completely inconsistent with both sound contract management principles and the policy of devolving power to the people of London.

'I have seen public authorities promise actual direct damages if they behave unreasonably, but 30 years of profits? The amount of leverage it conveys to the Infracos is staggering.'

A LUL spokesman said: 'This type of clause is in the standard PFI conditions of contract issued by the Treasury.'

'We only introduced it relatively late because we wanted to address more complex issues first, to ensure provision for them was there, before moving on to the less difficult issues.'

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