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Railhub Archive
2001-03-13 RTK-001
Railtrack Group plc


Railtrack' s response to the SRA strategic agenda

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Railtrack Group plc

Railtrack' s response to the SRA strategic agenda

13 March 2001
source Railtrack Group plc
type Press release

Railtrack welcomes the publication today of the Strategic Agenda by the
Strategic Rail Authority (SRA).

The Strategic Agenda clearly endorses the principle that Railtrack should own
and operate the entire rail network. Railtrack, in common with the majority of
rail industry participants firmly believes that the highest levels of safety,
efficiency and reliability can only be achieved with a single network

The Strategic Agenda focuses upon enhancement, future investment and the
delivery of major projects. Railtrack's approach to the management of its
business activities is already broadly consistent with that set out by the
SRA, with the core operations, maintenance and renewal activities being
managed separately from the major projects group.

Currently all enhancements are wholly resourced, financed and managed by
Railtrack. However, given the proposed scale of investment going forward
Railtrack believes that a more participative approach is necessary. It has
made it clear in a number of public fora that the Company accepts there is a
wide range of alternative models for delivering enhancements.

It is also fully recognised by all parties that the operation and maintenance
of the rail network is inextricably linked with the enhancement and upgrade
programme, unless it is a green field site. Renewal of the existing
infrastructure can make up over 60% of a typical major enhancement project.
It is therefore inevitable that Railtrack will continue to have an ongoing
involvement in all network upgrades, with other partners contributing skills
and resources as appropriate and taking a significant proportion of the risk.
The degree of involvement by Railtrack in terms of managerial and financial
control and the allocation of risk are expected to differ on a
project-by-project basis.

As the SRA states in its document there is clearly a great deal of detailed
work to be done to convert these ideas into structures and to flush out all of
the issues. As yet Special Purpose Vehicles (SPVs) are unproven as a financing
vehicle for the sharing of risks on the operating railway. Railtrack is
currently working with its customers to develop the first Special Purpose
Vehicle for the South Central re-franchising.

There are a huge number of other constraints facing the industry. These
industry wide challenges include the availability of risk capital and
financing (including Railtrack's), the ability to cost effectively gain access
to the network (possessions), the growing constraints on the industry supply
chain, the timing of the re-franchising and the sheer size of the industry's
current agenda. Ambition and realism are called for in equal measure.

Commenting on the Strategic Agenda, Railtrack's Chief Executive, Steve
Marshall said;

'Railtrack looks forward to working in a public private
partnership with the SRA to deliver a safer, better and bigger railway system.
There is a huge amount of work to do to establish in detail how this can be
achieved more effectively and we are up for it.

'Railtrack has an essential and irreplaceable role to play in the development
of the rail network, but we cannot and will not try to do it on our own. Given
the scale of the upgrades proposed Railtrack has already recognised the need
to work with other parties and is leading the first project to do just that'

- ends -

Notes to Editors

At the time Railtrack announced it was accepting the ORR regulatory
determination, which comes into effect on 1 April 2001. It also noted the
need for resolution of certain issues relating to deferred Government grants.
These deferred grants represent in excess of £1 billion of revenue, which the
Regulator has agreed that Railtrack needs to spend on the rail network.

The Company is currently in discussions with the Strategic Rail Authority and
the DETR over the timing of such revenue grants. As previously stated while
these discussions are continuing Railtrack will make no commitments to new
enhancement schemes. If no resolution of these issues is achieved by 31 March
2001 then Railtrack could apply to the ORR for an early interim financial

For more information please contact the Railtrack press office on 020 7557

All recent press releases can be found on the Railtrack web site

Railhub Archive ::: 2001-03-13 RTK-001


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