UK: Network Rail's contract to manage and maintain the high speed line between London and the Channel Tunnel on behalf of infrastructure concessionaire HS1 Ltd has been revised and will now run until at least 2025.
Announcing the new agreement on April 25, Network Rail said it would align 'incentives for quality and efficiency', offer HS1 Ltd a 10% reduction in price and facilitate sharing future savings.
HS1 Ltd, owned equally by Ontario Teachers' Pension Plan and Borealis Infrastructure Ltd, acquired a 30-year concession to own and operate High Speed 1 in 2010. Network Rail's Network Rail (CTRL) subsidiary operates, maintains and renews the line under a contract which has run from the opening in 2007 to 2047.
This contract included the right for HS1 Ltd to 'market test' for alternative service providers, and HS1 Ltd could have terminated the contract in 2015 by giving notice by March 31 2012.
The revised deal gives HS1 Ltd a new fixed price incorporating a 10% reduction in costs to March 31 2015, and moves the break clause to 2025. Beyond 2015 a new fixed price will be agreed, determined through the periodic review process undertaken by the Office of Rail Regulation for HS1 Control Period 2 (2015-20) and Control Period 3 (2020-25).
Network Rail and HS1 Ltd will equally share any financial outperformance by Network Rail; HS1 Ltd will in turn share 60% of its discount and outperformance with the train operators.
'We conducted an extensive market review and knew that we had alternatives', said HS1 Ltd CEO Nicola Shaw. 'However, the quality of delivery from Network Rail (CTRL) has been good over the last few years and this deal offered real benefits to us and to our customers. We've now got a decade of certainty on which to work together to improve the line even further and to welcome more growth.'
