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Railhub Archive
2001-02-02 TfL-001
Transport for London


TfL / DETR agreement on the way forward on the London Underground PPP

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London Transport
Transport for London
public-private partnerships

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Transport for London

TfL / DETR agreement on the way forward on the London Underground PPP

related documents

2001-02-02 Prescott and Kiley agree to work together on the London Underground Public Private Partnership (Department of the Environment, Transport and the Regions)

2000-03-30 Pressing ahead with the PPP - Public Sector Comparator details published (Department of the Environment, Transport and the Regions)


2 February 2001
source Transport for London
type Statement

1 The parties to the ongoing negotiations regarding the future of the Underground
have spent the better part of three weeks in constructive dialogue in which there
has been a full airing of the Government’s PPP proposal as well as alternative
proposals suggested by TfL.

2 It is TfL’s primary objective that the PPP structure be modified so that there is
unified management control over the operation, maintenance and rebuilding of the
Underground by the Infracos. TfL recognises that the private sector can make a
positive contribution to the restoration of the Underground, including by carrying
risk through private equity.

3 The Government considers that the PPP, through privately-owned infracos, delivers
effective and credible risk transfer where the private sector is incentivised through
the achievement of specified performance objectives. The Government
acknowledges that the strong management capability assembled by TfL in principle
justifies amending the PPP structure to achieve greater co-ordination between
operations and investment as well as enhanced transparency.

4 The parties have reached a point in their negotiations that their respective positions
can only be fully evaluated by working together to establish jointly agreed
modifications to the PPP tender so as to assess whether there are terms, acceptable
to both the Government and TfL in the light of the principles set out above, that
can be offered and agreed upon with the bidding consortia.

5 Both parties agree that a long term Government financial commitment is essential
so that the finance for the required investment program can be obtained. They also
agree that the earliest time to establish the level of the Government commitment is
when the modifications to the PPP tender come to be jointly agreed.

6 The parties have therefore agreed as follows:

(a) Mr Kiley will assume responsibility, with the support of the Government, for
developing modifications to the PPP tender. During this stage, Government
and TfL will closely co-ordinate all the activities involved in this process.

(b) When these modifications are agreed between the Government and TfL, Mr
Kiley will assume the Chairmanship of London Transport, which will manage
the remaining stages of the negotiation of the PPP arrangements on the
same basis as hitherto.

(c) Once (a) and (b) are completed, it is anticipated that another round of
bidding will be required under which the bidding consortia will be requested
to submit revised proposals that provide for Infraco governance and
management on terms that will provide for unified management of the
Underground and which continue to rely upon private sector finance.

(d) The Government and TfL will jointly evaluate the results of the revised
solicitation and determine whether the proposals are acceptable to both

(e) If the terms are acceptable to both the Government and TfL, preferred
bidders will be selected and the PPP contracts will be finalised after final
negotiations and receipt of all necessary approvals and authorisations.

7 The parties expect the modifications to the PPP tenders referred to in paragraph
6(a) to be agreed by 28 February 2001, and the further round of bidding to be
initiated around 15 March 2001. The Government and TfL will meet at regular
intervals during these periods to review progress and resolve any issues arising.

Railhub Archive ::: 2001-02-02 TfL-001


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