Metronet, the company behind a £17bn Tube maintenance programme called in administrators amid serious financial problems.
London Mayor Ken Livingstone’s Transport for London (TfL) provided emergency funding of £700m from the taxpayer to ensure the safe running of the nine Tube lines under Metronet’s control.
Mr Livingstone said the crisis “would not undermine services”
“All trains will continue to run and all stations will remain open,” he said.
Ernst & Young has been appointed as administrators and insolvency expert Alan
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Bloom assured Londoners that he had an “overriding obligation” to ensure the Tube network continued as normal.
London Underground Managing Director Tim O’Toole however, warned that a programme of up to 70 station upgrades planned by Metronet might be delayed for months.
“This will feed in with the larger discussion with the government with the funding of the TfL and transport in London,” he said.
It is understood the size of the cash boost for Metronet could be around £750m, which would be enough to cover the firm’s weekly funding gap of £30m until the end of this year. TfL however have not confirmed this.
Metronet has been involved in a long-running dispute with TfL regarding who should pay for the spiralling costs of upgrading the network’s transportation.
The company had planned to invest £17bn over the next three decades under the terms of a public-private partnership (PPP) scheme. This method of financing large products has been supported by the government, but opposed by London’s Lord Mayor.
The operator of the other PPP Tube contract for the Northern, Picadilly and Jubilee lines, Tubelines, adopted a competitive tendering process and has not suffered any substantial cost overruns.
(JM)
