Political wrangles likely to delay signing of landmark £16bn deal to privately finance London's Underground.
Contractor Jarvis has warned shareholders that the £16bn public–private partnership Tube contract may not be signed before Christmas.

Jarvis chief executive Paris Moayedi has told shareholders "not to count their chickens" and to be wary of recent reports that financial close will be reached by 7 December. He said: "We remain confident that a deal will be signed by Christmas, but there are political issues."

These political issues include a possible appeal by London mayor Ken Livingstone to the European Commission over its clearance for the PPP deal, which would inevitably delay the signing of a contract. Last week, Livingstone wrote to transport secretary Alistair Darling warning that Transport for London's lawyers had found grounds to appeal.

Jarvis is a member of the Tube Lines consortium bidding for the deal. Contractor Amey is also part of this consortium, but is in financial trouble. Moayedi said Amey had assured Jarvis that it will still be able to cover the £60m it must invest as part of the deal.

Apart from the Tube project, Jarvis signalled a plan to concentrate on medium-sized PFI projects in the future. The company recently had its fingers burned when it pulled out of the £3bn Allenby & Connaught Ministry of Defence scheme. Moayedi explained at the company's interim results meeting that it could have faced a bill of £2-3m in bid costs if it had stayed in the race. The board took the view that this risk was too high.

Moayedi said PFI and PPPs remained the best option for major capital projects in the UK, and attacked critics of private financing for public projects. He said: "It is regrettable that the press is so anti-PFI because it has such benefits – so many countries are copying the UK, such as Ireland."

Jarvis has not suffered from the accounting problems that have affected others in the support services sector, notably Amey. Jarvis' pre-tax profit was £19m for the six months to 30 September, a rise of 17% on the same period last year.

However, last year's pre-tax figure was marked down to £16.6m from £17.7m because of accounting changes that mean bid costs on PFI projects no longer count as assets until the contract is signed off.

This year's profit was boosted by a £3.7m pension credit and the firm's turnover rose 26% to £534.4m. Jarvis has bids for contracts worth £13.5bn in the pipeline, mostly in the rail, education and highways sectors.

The company is still awaiting results of an investigation into the Potter's Bar derailment, at a site where Jarvis was responsible for track maintenance. Moayedi said: "All we have begged people to do is to keep an open mind."