Eurorail poised to retender for Channel Tunnel rail link
Wednesday 04 February 1998
The five partners in Eurorail - Kvaerner Construction, Balfour Beatty, HSBC Holdings, NatWest and Seeboard, are expected to meet in the next two days and confirm their interest in submitting a fresh bid by the end of the week.
Meanwhile, Railtrack is due to decide formally whether to submit a rival bid to rescue the troubled project at a board meeting a week tomorrow.
Eurorail lost the competition to build the 68-mile link in 1996 after it asked the Government for pounds 500m more in subsidies than the winning bidder, London & Continental Railways.
LCR last week told the Government that it could not proceed with the project because revenues from the Eurostar service - a vital part of its financing plans - were pounds 2.5bn below its original forecasts. The Deputy Prime Minister, John Prescott, rejected its application for a further pounds 1.2bn in subsidies
Eurorail originally asked for pounds 1.7bn in taxpayers' support. However, its revenue forecasts for Eurostar were much more conservative than those of LCR. Eurorail planned to finance the project with debt in its early stages, only going to the stock market to raise equity finance much later in the construction phase.
Industry observers say Eurorail is concerned that Railtrack may be allowed to walk in and take over the project by default, when European procurement rules dictate that there should be an open contest.
Eurorail also has more experience of the CTRL than any other group, having been involved in the project since 1988, when it was originally conceived as a joint venture.
The consortium contacted the Government last November, asking to be kept informed of developments, after LCR began running into financing difficulties.
Railtrack confirmed that one option being studied was to build the link in phases so that the high-speed line would initially end at Ebbsfleet in north Kent and then continue to Waterloo International. This would cut pounds 500m from costs.
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