Channel Tunnel link group rules out stopping short of London

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The Independent Online
The consortium chosen to build the high-speed Channel Tunnel rail link yesterday emphatically ruled out stopping the line short of central London and said its plans to raise up to pounds 5.4bn in finance and let key tunnelling contracts remained on course. Michael Harrison reports.

London & Continental Railways (LCR), which was awarded the franchise to operate rail services to the tunnel in May last year, said the option of phasing the project or ending the route at Stratford in Essex or Ebbsfleet in Kent had been "discarded as fundamentally flawed".

Adam Mills, chief executive of LCR, said both it and the Government were so committed to building the 68-mile link right through to St Pancras station in central London that the issue of alternatives had not even been discussed with John Prescott, Deputy Prime Minister and Secretary of State for Transport, Environment and the Regions.

"There is no doubt in my mind that the link will be built as planned because first that is what we are legally contracted by the Government to do and second because all the evaluation we have done shows that the economics of the project would not work if it ended anywhere else," Mr Mills said.

He added that preferred contractors for pounds 500m worth of tunnelling work into London would be announced before Christmas with the contracts let in the spring.

LCR also intends to present detailed proposals to the City covering the financing and building of the link early in the new year ahead of a pounds 5.4bn fund-raising exercise in the middle of next year.

Although LCR is still proceeding on the basis of floating on the stock market as an independent business, Mr Mills did not rule out participation in the project by a third parties.

The consortium is talking to seven other parties including Railtrack about how they could help with the financing and construction of the link.

LCR said it remained confident that the capital cost of the project would not exceed pounds 3bn in 1995 prices. However, together with working capital for its existing train operation, Eurostar, and financing costs, the peak funding requirement could reach pounds 5.4bn.

LCR confirmed that the fire inside the Channel Tunnel a year ago had affected passenger growth rates for its Eurostar service and said it would set out details of its new forecasts to the City in its presentation early next year. Eurostar will handle about 6 million passengers this year compared with a forecast by the tunnel operator Eurotunnel of 6.7 million.

Eurotunnel put Eurostar passenger numbers at 9.6 million next year and 10.6 million in 1999.

Mr Mills said the link was still on schedule to open as planned in 2003 and that tenders had been invited for two-thirds of the construction cost.