BR's profitable freight operations to be split into three: Future of loss-making services remains uncertain as Government publishes privatisation proposals

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BRITISH RAIL'S profitable freight operations are to be divided into three regionally based businesses, but no date has yet been set for their privatisation.

The proposal is contained in a document published yesterday that sets out the Government's long-awaited plans for rationalising and privatising BR freight. The bulk business, Trainload Freight, which handles coal, petroleum, aggregates and steel will be split into three, each of which is expected to be profitable.

Although the companies will be geographically separate, covering the South-east, the North-east and the West (including both Scotland and Wales), they will be expected to compete against each other for services all over the country. New operators will also have open access to the rail network.

The new companies will combine the services run by Trainload Freight, which made a profit of pounds 67.5m on a turnover of just over pounds 500m in the year to April 1992, with some of the services run by Railfreight Distribution (RfD), BR's other freight arm. RfD is expected to make a loss of about pounds 90m in the year to April 1993 on a turnover of around pounds 160m.

The Government hopes the companies will be set up on 1 April 1994, the date on which BR's infrastructure will be hived off to the new track authority, Railtrack, and its rolling stock passed to public sector leasing companies.

John MacGregor, the Secretary of State for Transport, was yesterday unwilling to give the names of any firms interested in buying the new freight companies but said: 'We have had visits from overseas.'

The Government seems no nearer to solving the dilemma of what to do with the loss-making services.

The future of Freightliner, the containers network that is expected to contribute the bulk of RfD's losses, remains uncertain. Despite the losses, the Government cannot close it down because of the protests that would result from the environmental lobby.

Instead, improvements in Freightliner's cost and efficiency are being sought and the Government is inviting customers and trading partners to submit proposals on how to develop the business. The DoT hopes to announce plans for Freightliner by the end of this year. Meanwhile, it will stay in the public sector.

RfD's international arm, which has invested pounds 400m to take advantage of the Channel tunnel, will also remain in the public sector as it is not expected to become profitable for several years. But it will be privatised as soon as possible, the DoT said.

However, Rail Express Systems, which handles the overnight mail trains that help distribute 30 per cent of letters, will be privatised much sooner.

Rail Freight privatisation, the Government's proposals, Department of Transport.