Channel tunnel faces further delay

THE OPENING of the Channel tunnel has been further delayed until December 1993 - seven months later than planned - and a full range of shuttle and through train services will not operate until July 1994.

The latest setbacks, announced yesterday by Eurotunnel, will cut its forecast revenue by pounds 140m- pounds 180m in the first year of operation and almost certainly force it to return to its shareholders for more money after the tunnel finally opens.

The news sent Eurotunnel's units tumbling 62p to 358p.

Cost forecasts of the 30-mile (50km) link have risen from an initial pounds 4.8bn to pounds 9bn, but the final figure could be as high as pounds 9.5bn according to some estimates.

The fresh delays came as Eurotunnel remained locked in a pounds 1.26bn claims dispute with the tunnel builders, Transmanche Link, and prepared to sue the British and French governments over what it claimed were 'excessive' safety demands.

Sir Alastair Morton, Eurotunnel's chief executive, disclosed that it had offered the contractors a settlement of pounds 980m last May, coupled with an issue of shares up to a maximum of 10 per cent of its equity, but the offer had been rejected.

Eurotunnel and TML are thought to be only pounds 100m- pounds 130m apart but Sir Alastair said that unless the claim was settled this month the two sides could remain in dispute for years.

He also warned this could further delay the opening, saying: 'We hope the start-up date will be no later than mid-December 1993 but everything depends on TML.'

Provided the link opens by that time, there would initially be through-rail and shuttle freight services and a limited passenger shuttle service operating once an hour.

A full passenger service, building up to three shuttles an hour, would be introduced gradually throughout 1994 while British Rail and SNCF high-speed through trains would not be operating fully until July 1994.

The delays are due to hold-ups in the delivery of shuttle wagons and locomotives from Breda-Fiat in Italy, Bombardier of Canada and Brush, a subsidiary of BTR.

Separately, the fleet of Transmanche Super Trains ordered from GEC Alsthom by the British, French and Belgian railways are a year behind schedule.

Eurotunnel is making penalty claims against BR for the late introduction of through services and delays to its international passenger station at Ashford, Kent, which will not open until late 1994 at the earliest.

Separately, Eurotunnel expects to submit claims early next year against the two governments to compensate it for the costs of additional safety and security measures demanded by the Inter-Governmental Commission.

Eurotunnel is also seeking damages over the decision to subsidise the ferry operators by allowing them to continue duty-free sales until 1999 and delay implementing new safety requirements.

Sir Alastair reiterated his pledge that Eurotunnel would not return to its 600,000 shareholders for more money before the link opened.

However, a further rights issue is certain after that, probably in 1995, to help the consortium meet interest payments on its bank debt.

Eurotunnel has raised a total of pounds 1.6bn in equity and pounds 7.276bn in loans from a worldwide syndicate of 210 banks. Interest payments will peak at pounds 1.5m a day.

According to Eurotunnel's own traffic forecast, the first it has published, revenues will total pounds 504m in 1994.

However, the latest forecast from its independent consultants puts income in 1994 at only pounds 465.2m, pounds 180m less than the previous forecast.

The tunnel is forecast to be carrying 44 million passengers and 26.4 million tonnes of freight by 2003, bringing in revenue of pounds 971.4m.

(Photograph omitted)