London Underground would be likely to break up the contracts currently held by Metronet if its plans to take control of the cash-strapped maintenance group are successful. Tim O'Toole, LU's managing director, yesterday told a London Assembly Transport Committee hearing he would restructure Metronet's contracts, which amount to two-thirds of scheduled maintenance and upgrade work on the Tube, before offering work to private sector contractors anew.
LU is the only organisation so far to have expressed an interest in acquiring Metronet, which filed for administration in July after failing to win sufficient extra cash from regulators. Metronet had previously warned overspending on two renewal projects would amount to £2bn and blamed LU for changing its brief, but the arbiter of the public private partnership on Tube renewal said it would have to cover most of the costs itself.
Mr O'Toole said the only way to get Metronet out of administration within the next few months would be to restructure the work for which it is currently responsible. "If we got hold of it, we'd get these contracts restructured and that would be saleable," he said. "We could break it up and put the station upgrades out to somebody and the track upgrades out to someone else."
Ernst & Young, the administrators to Metronet, said that it was still trying to establish whether any other bidders might emerge. LU is expected to make a formal offer before the end of this month, but Alan Bloom, the partner responsible for Metronet, told the London Assembly committee yesterday that he was waiting for the results of a review of the contractor's value.
"[The review] might show the value is significantly below the level of secured debt and we may reach the conclusion it's pointless to market the public private partnership," Mr Bloom said. "We have approached a number of parties with a view of gauging the way the market is looking at projects like this."