Cost - a continual tunnel irritant

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The Independent Online
THE ARGUMENT over the fixed costs of the tunnel was one of the chief irritants in the long feud between Eurotunnel and TML.

The contractor's consortium had quoted pounds 620m for the electrical and mechanical equipment when the agreement to build the tunnel was signed in 1987. But, as with almost every large scheme, it expected this figure to rise as specifications changed. By 1991, Eurotunnel had paid pounds 720m (at 1985 prices), including an element for agreed changes.

In 1992, TML demanded more, and under protest Eurotunnel handed over pounds 200m. Further demands were made, the relationship deteriorated, and it was only when Sir Alastair Morton and Neville Simms decided last summer that enough was enough that the deadlock was broken. In July, they issued a protocol under which Eurotunnel agreed to pay a further pounds 235m and TML said it would hand over the tunnel on 10 December. It also agreed to put together a detailed analysis of its costs.

The tunnel was transferred on time, and on 31 December TML presented a bill for pounds 1.95bn. Sir Alastair and Mr Simms decided to short-circuit future haggling over this figure, and came to broad agreement two weeks ago. The lawyers then swung into action, and the final deal was signed late on Monday night.