The odds on Tube Lines snapping up Metronet’s maintenance contracts shortened dramatically this week after the government’s arbiter said the collapsed group was theoretically entitled to claim up to £1.1bn from London Underground.

This suggests that a private consortium could run the contracts efficiently. Transport for London had suggested that it would be better to take the contracts in-house.

Much now depends on a report compiled by investment bank

NM Rothschild, which is acting as Metronet’s administrator. This document, which is due to be published in the next few days, will place a cash value on the firm’s contracts. It is expected that the arbiter’s ruling will influence Rothschild’s document.

One City insider said: “The government would like the contracts to go to Tube Lines to keep PPP on track, but Ken Livingstone would go berserk.”

Another said: “Tube Lines is the only one in the frame. Following the arbiter’s report, Transport for London can’t just pick them up. Tube Lines has done a good job on its contracts and the arbiter has made it clear there’s value in the contracts if you’re efficient.”

The government would like it to go to Tube Lines but Ken would go berserk

City source

Tube Lines, owned by Amey and US engineer Bechtel, declined to be drawn on whether it would bid for the contracts, but a spokesperson said: “We weren’t surprised by the outcome but we cannot make recommendations to shareholders until we get the administrator’s report.”

Brian Sedar, who this week took over as director of projects at the organisation on secondment from Bechtel, would say only that he was determined that Tube Lines would complete its own work on time and to budget.

Chris Bolt, the arbiter, said Metronet could have claimed between £140m and £470m on its contract for the Bakerloo, Central and Victoria lines (BCV) and between £230m and £600m on its contract for the sub–surface lines.

These are Bolt’s estimates of how much Metronet’s original contract for the BCV and SSLs should have been increased by to cover work to be carried out from July 2007. Metronet claimed that the extra work amounted to £2bn.

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