Call for tunnel 'guarantee': Eurotunnel chairman says state could do more

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The Independent Online
ANDRE BERNARD, chairman of Eurotunnel, yesterday called on the British and French governments to 'guarantee' the Channel tunnel project.

Although Mr Bernard stopped short of requesting direct state support, his remarks are the nearest Eurotunnel has yet come to asking the two governments to in effect underwrite the troubled project.

In an interview with the French newspaper La Tribune Desfosses, Mr Benard said that while government funding was not needed, 'the state could do much more in giving guarantees - restricted of course - rather than direct investment'.

Under the Channel Tunnel Act, the two governments are prevented from funding the project, which remains dogged by a cost dispute between Eurotunnel and Transmanche Link, the contractors.

With the project forecast to cost almost pounds 10bn - double the original estimate - and the opening delayed by a year, both Eurotunnel and TML, a consortium of 10 UK and French construction firms, are increasingly anxious to settle their dispute.

Senior British ministers have been advised by UK contractors that, under current circumstances, there is no prospect of the tunnel being completed before the end of next year. It had been due to open this week.

TML believes that a partial opening may still be possible by next summer, with shuttle services and international services to Waterloo station phased in slowly, but only if the two sides can settle their cost dispute and co-operate on commissioning.

Negotiations broke off in March after failure to agree a compromise on the cost overrun. The contractors offered to settle for pounds 1.065bn in cash and pounds 270m in Eurotunnel shares and promissory notes. In response, Eurotunnel offered pounds 930m and pounds 270m in equity and zero-coupon subordinated bonds.

TML rejected the offer, saying that not only was the cash element too small and the mix of equity and bonds unacceptable, but also that Eurotunnel wanted to attach other, unrealistic conditions.

(Photograph omitted)

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