Metronet crisis: Transport for London ready to take over if necessary

Transport for London (TfL) has made contingency plans to take over some of Metronet’s maintenance work on its London Underground Public Private Partnership (PPP). The move indicates deepening concern about the consortium’s viability, following its recent claim for an additional £2bn in cost overruns.

The contingency plans, revealed by Metronet chief executive Andrew Lezala last week, were confirmed by TfL this week. A spokesman said: “As you would expect, TfL is preparing for all eventualities on the PPP with Metronet.”

However, TfL denied claims it has been talking to Ferrovial or Tube Lines about the possibility of either taking over some of Metronet’s Tube maintenance works.

A Tfl spokesman said: “TfL is not in, nor has it been in, discussions with Ferrovial or Tube Lines with regard to the taking over of Metronet’s responsibilities.”

One insider said: “This is an opportunistic claim that indicates that the vultures are circling over Metronet.”

Metronet has asked the PPP Arbiter to instigate an Extraordinary Review of its cost overruns, revealed by CJ last week to total around £2bn, almost double original estimates.

The consortium said it accepted liability for the first £55m of cost overruns, plus a further £120m incurred through its own inefficiencies. However, Metronet says the remaining £992m of the extra costs on its BCV Infraco were due to additional works.

Metronet is also asking the PPP Arbiter for an interim declaration of costs to provide emergency funding of £400m. The consortium also confirmed it is seeking to claim a similar amount of cost overruns on its SSL Infraco.

Metronet insisted its shareholders, Balfour Beatty, Atkins, Thames Water, EDF and Bombardier are still “fully supportive” of the consortium. A spokeswoman said the shareholders are still in talks with Metronet’s banks, which are currently withholding Metronet’s lending facilities. The banks, led by the European Investment Bank, which has put up £600m of a £1.6bn loan facility, granted an initial six-month waiver last September to allow Metronet to continue to draw funds but recently to grant a second waiver to the consortium.