Monday, June 21, 2010

Britain selling Chunnel rail link operating rights

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Transportation experts say the budget-squeezed British government could reap as much as 1.5 billion pounds ($2.23 billion) from the planned sale of HS1 Ltd, which has a 30-year concession to run state-owned 110-kilometer (62-mile) High Speed 1 line which links central London to the Channel Tunnel.

The line also serves Stratford in east London and Ebbsfleet and Ashford in Kent.

Secretary of State for Transport Philip Hammond announced the sale on Monday. The line is currently operated by the government-owned London and Continental Railways.

“The money generated by this sale will make an early significant contribution to the crucial task of reducing the publicsector debt,” Hammond said. “But the sale will also bring benefits to passengers as the successful private bidder will be incentivised to attract new operators serving new routes.”

The government said Channel tunnel operator Groupe Eurotunnel SA is working on a bid with Goldman Sachs Infrastructure Partners, its biggest shareholder, and with Infracapital, the infrastructure arm of Prudential unit M&G, another big shareholder.

Other sources said potential bidders could include funds such as 3i Infrastructure Plc; Deutsche Bank’s RREEF unit; Morgan Stanley Infrastructure; and Borealis Infrastructure, a unit of Canadian pension plan Ontario Municipal Employees Retirement System.

France’s SNCF and Germany’s Deutsche Bahn may also be interested.

“The Government does not have to run everything directly,” said Hammond, the new Conservative government’s transport chief. “We need totake prompt action where private enterprise can provide both a better deal anda superior service to the public.”