Railtrack calls on government to assist with excess costs

by John Leitch



Railtrack's £600m private deal with Virgin Rail to upgrade the West Coast Main Line by 2005 has come badly unstuck. After making a fixed-price offer, Railtrack is said to have found that actual costs will be £1bn higher than expectations.

Taking on an extra £1bn cost "has serious implications for Railtrack's viability", said a rail analyst this week. Railtrack's private negotiations to pay £200m to Virgin Rail in order to pull out from the deal are expected to be unsuccessful, leaving it with no option but to ask the government for the extra £1bn.

Private contractors wishing to bid for the £1.6bn-worth of extra work would find that most of the potential workload involves the building of cross-overs and laying of additional rails, resulting in a four-track network with slower freight trains using the two outside lines.

The analyst said: "Railtrack doesn't understand the condition of its assets, so when it gets to take a close look it finds it has to spend more than expected.

"We will see Railtrack management going to the government for the extra money, but it is already asking for an extra £2bn and the Treasury won't want to be seen as a bottomless pit."

The latest reforecast cost for the overall upgrade is £6.3bn. A Railtrack spokeswoman said it was "rubbish" to claim that the cost of the upgrade had risen further.