Tube repair company may go bust as arbiter refuses emergency funding
The likelihood of Metronet going bust increased today as it was denied the £551m of emergency funding it had asked for.
The PPP London Underground consortium had asked an independent arbiter to increase the money it receives over the next 12 months from the infrastructure service charge (ISC) by £551m.
However, arbiter Chris Bolt recommended the charge payable to Metronet by client London Underground be increased by just £121m. LU is against any increase.
Metronet had originally asked for £400m of emergency funding but increased that to £551m because its lenders put a drawstop on funding.
Bolt said today: “After careful analysis of the evidence, in the limited time available, I have concluded that this increased ISC is at the appropriate level for an efficient and economic company performing in line with good industry practice.”
Metronet has been given seven days to respond, and Bolt expects to publish his final directions on the emergency funding by 31 July.
Metronet’s immediate response was a warning. A statement this morning said: “Metronet will respond more fully to the arbiter’s draft interim directions shortly, as soon it has assessed the full impact on its business.”
Its request for the extra funding forms part of the extraordinary review that Metronet requested to claim £2bn of extra costs. It says it has incurred these because the client has vastly increased the scope of work on the station upgrade programme.