City: No black hole

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LAST Monday, Sir Alastair Morton, chief executive of Eurotunnel, spent six-and-three-quarter hours in front of the cameras and microphones explaining away the company's latest announcement. On the face of it, it was a depressingly familiar tale. The opening date for the Channel tunnel has been delayed yet again and, as a consequence, costs have once more been revised upwards - they are now more than double the forecast in the original prospectus. Many investors are asking in exasperation when it is all going to end. Long-standing bears of Eurotunnel, like Richard Hannah of UBS, seem finally to have been vindicated; this is a project that can never seriously be expected to make any money for shareholders, the headlines seemed to say.

The real story, I believe, is rather the other way round. It is that against the odds, the Channel tunnel has to all intents and purposes now been built and that some time soon, probably early next year, it will be open for business. Most of the remaining risk has therefore been removed. The amount of revenue the tunnel will generate is still unknown, but it is in the nature of infrastructure projects like this that they create their own demand. Look at the M25. When first conceived, many condemned it as a wasteful project for which there was no need. Within a few years of it opening, it was apparent that something rather grander should have been built, such was the demand. Shareholders are going to have to cough up more money for Eurotunnel - probably about pounds 400m - and with the latest delays there is no prospect of a dividend until 1997 at the earliest. But as an unregulated, near-monopoly utility, it's much more likely that Eurotunnel will eventually come to be seen as a licence to print money rather than the black hole it now appears.