On 9 Mar 2007 06:16:51 -0800, "Mizter T" wrote:

On 9 Mar, 13:59, "Bob" wrote:
On Mar 9, 1:35 pm, "Mizter T" wrote: On 9 Mar, 11:58, Tom Anderson wrote:

On Fri, 9 Mar 2007, Bob wrote:
'I can't think of any PFI project we have inherited that wasn't
dysfunctional in one way or another." So said Ken Livingstone, in
typically forthright fashion.

So who negotiated the contract in the first place?

From the TfL website:

Tramtrack Croydon Ltd won a 99-year Private Finance Initiative (PFI)
concession to design, build and maintain the Croydon Tramlink System
in 1996
Croydon Tramlink was opened in May 2000
Croydon Tramlink carries around 24 million passengers a year
TfL inherited responsibility for the PFI contract with Tramtrack
Croydon Ltd following TfL's creation in 2000.

Remember that Ken was in the outer darkness at the time and had the
Tube PPP foisted upon by the Treasury - presumably the same thing
happened in Croydon.

Sort of the same thing - though the Underground PPP was an
'innovation' of the new Labour government elected in 1997, whilst the
Tramlink PFI deal was done under the previous Tory government.

Not really the same thing at all. The PPP is a long maintenance and
upgrade contract - the operation remains in the public sector as do the
assets. The PPP Contractors take no revenue related risk as they do not
have access to the farebox revenue and no incentive to directly increase
such revenue. Indirectly they have an influence in that a better
performing railway should attract custom and delivery of the line
upgrades will grow revenue as a result of better train services and more
capacity. They, for example, do not have an immediate obligation to make
stations much bigger if ridership increases. This is almost an
impossible risk to pass to the private sector as growth trends are
hugely variable and the associated expenditure to make stations much
bigger is in the tens or hundreds of millions of pounds.

Under Tramlink design, build, maintain and operate is all in the private
sector and I believe the assets belong to Tramtrack Croydon too. These
would revert to the public sector upon termination or expiry of the
contract. I suspect the row about Tramlink centres on several things -
revenue assumptions given that TfL have radically changed the fares
structure assumed for Tramlink, maintenance and upgrade responsibilities
- the system will very soon need some major work doing to it to keep it
fit and the upgrade risk resulting from passenger growth.

Given the Tramlink deal is for 99 years it is pretty important to get
these "fault lines" in the contract sorted out. If it is not resolved
quickly then you will end up with a system that is simply falling to
bits because the respective parties will walk away from their real /
imagined obligations to maintain and grow the system. Given the
argument that was in the article I think TfL are on pretty weak ground
and will end up coughing up the money. I suspect their quid pro quo
will be much greater direct control over the operation as per the DLR
set up. There will almost certainly be a renegotiation or else a large
scale variation to the contract - I doubt the parties are genuinely at
the "tear it up and walk away" stage.

The other very interesting factor that is not yet obvious is how will
the system be extended. If we look at the Metrolink precedent each time
the concession has been relet and each time the operating consortium has
changed. Quite what compensation has flowed between the parties in the
background I do not know but if Tramlink does extend to Crystal Palace
(or wherever) it will be interesting to see how TfL decide to play the
procurement game.


--
Paul C


Admits to working for London Underground!