Setting up a single rail franchise for regional services in Wales will involve a public subsidy of £1.8bn over the next 15 years, the Strategic Rail Authority said yesterday.
The authority confirmed that the bus and rail operator Arriva, which was named as preferred bidder for the franchise in August, would operate the services and be responsible for all stations in Wales as well as those at Chester, Hereford and Shrewsbury.
The SRA said the level of subsidy was in line with amounts currently being paid for the various services that will be amalgamated into the Welsh franchise. It will peak at £121.7m in 2006-7.
However, the figure does not include any additional payments the Welsh Assembly may choose to make. Improving transport infrastructure, including roads and air travel as well as the railways, is a high priority for the assembly. It particularly wants to see new services on the Vale of Glamorgan and Ebbw Vale lines.
The franchise will include some services previously operated by National Express. These include Cardiff to Hereford, Shrewsbury and Manchester and Wales to Birmingham, north-west England and the West Country. Long-distance high-speed services operated by First Great Western and Virgin are excluded.
Arriva shares fell 8p to 399p yesterday.