Chunnel link battle begins: Rival bidding groups are jockeying frantically as the deadline nears for tenders to build the pounds 3bn high-speed track to London. Neil Thapar reports

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The Independent Online
THE LOOMING deadline to bid for the pounds 3bn high-speed railway line from London to the Channel tunnel has pushed negotiations between potential backers of the project to fever pitch. John Mowlem, NM Rothschild, Kleinwort Benson and several overseas companies are the latest to throw their hats into the ring.

Last week, the Independent on Sunday revealed that at least six consortia were poised to declare their interest in the contract to build and run the 68- mile route from Cheriton in Kent to St Pancras, London - the mandate to run for 999 years. With a week left before they make a formal commitment to the project, there has been a last-minute rush ahead of the 25 April deadline.

Those companies taking a close look at the project include P&O, the main cross-Channel ferry operator, which is setting up a consortium to bid for the contract, led by its construction arm, Bovis. The company has confirmed that it is reviewing its options.

The latest to declare its hand is Mowlem, the civil engineering/construction company that owns City airport. It has teamed up with GTM-Entrepose of France, and plans to launch a jointly led consortium.

Hovering in the background are several City merchant banks such as Kleinwort Benson and Rothschild, and SG Warburg, which are forming alliances with individual consortia. However, the make-up of most is far from settled, even at this late stage.

Intense behind-the-scenes talks are in progress among a large number of big UK and overseas contenders as they decide which group to join.

'There is a lot of manoeuvring going on at the moment,' one leading participant in those discussions said. 'Many people will be keeping their cards to their chest, I suspect, until the very last minute.'

But all the indications are that foreign firms are likely to dominate the contest. Many of the UK builders - such as Wimpey, Tarmac and Sir Alfred McAlpine - are limiting their role to winning work as subcontractors.

The project is expected to be completed in about seven years and provide a privately owned service running trains at around 140 miles per hour on new track. Until it is built, European Passenger Services (EPS), which was recently hived off from the now defunct British Rail, will operate a much slower service on existing track. This is due to start in the autumn.

Although EPS will have new Eurostar trains, its existing track cannot provide sufficient electrical power to drive them at more than about 90mph, compared with about 170mph on the French section of the London-Paris route. But the high-speed link, with overhead power cables, will enable journey times between the two capitals to be cut from three to two-and-a-half hours.

After much public controversy the Government has selected the route for the new line, running through the so-called east London corridor.

Trains will stop at two stations en route: the first has already been selected as Ashford in Kent, but the second is the subject of vigorous lobbying by rival backers. The contenders are Stratford, Ebbsfleet and Rainham.

With much of the conceptual framework of the main project now close to being settled, the spotlight is turning on the contenders.

John Armitt, chief executive of Union Railways, the BR subsidiary responsible for the link, says: 'We have had a good response from British and overseas companies, and more than 30 have expressed a serious interest. We expect there will be about six consortia filing applications.'

The idea is to narrow down the field to four bidders which the Government considers have an adequate track record in handling large infrastructure projects.

The four finalists will be selected by June and invited to make formal tenders by the end of this year. The Government is expected to pick the winner in spring 1995.

The quartet will be asked to state the total cost of the project and how much government funding they will require.

A financial contribution could be made in several different forms. The options include a capital grant during or at the end of the construction period; regular annual grants; and payments for providing some surplus rail capacity to improve commuter services from north Kent and southern Essex.

The Government has already pledged to give the winners assets worth pounds 1.4bn - the bulk accounted for by the St Pancras and Waterloo International stations, new rolling stock used by EPS and 25 acres of land near King's Cross.

They will also inherit EPS next year, to provide them with a revenue stream while the link is built.

The Government has additionally agreed to write off pounds 1bn of EPS debts, though a number of uncertainties remain, such as whether the Government will pay off the leasing payments due on the Eurostar rolling stock.

Not surprisingly, this largess has helped to warm the private sector's interest in the project. On current reckoning, the leading consortium is Eurorail, whose members include Trafalgar House, BICC and General Electric Company. It is being advised by Kleinwort Benson.

Ove Arup, the consulting engineers, is fronting a group that includes Bechtel, the big US engineering and construction company, SG Warburg and, possibly, Halcrow, the consulting engineers who own Transmark, formerly BR's consultancy arm.

Hochtief, the German company building the Athens underground, is understood to have teamed up with Morrison Knudsen, the US contractor, to head another consortium.

Philipp Holzmann, also German, is thought to be linking with Rothschild and the consulting engineers Babcock Brown, with a view to making a submission.

But some companies may change their allegiance and join rival consortia in the next few days, to maximise their chances of participating in the project.

HERE are some of the possible line-ups in the race for the high-speed tunnel link contract:

Trafalgar House, BICC, GEC, Kleinwort Benson.

Bechtel, Ove Arup, SG Warburg (maybe Halcrow)

Hochtief (Germany) and Morrison Knudsen

P&O via Bovis

Mowlem and GTM Entrepose (France)

Philipp Holzmann, Babcock Brown, Rothschild

Cogefarimpresit (Italy) and/or Spie Batignolles

(Photograph omitted)