LU scraps Balfour Beatty PFI deal
London Underground is calling a halt on a 30-year private finance initiative (PFI) contract with a Balfour Beatty consortium half way through the term.
It has realised that the deal does not offer value for money and the work can be done more cost-effectively in house, like it always used to be.
LU entered into a 30-year PFI deal with Powerlink in 1998 to manage, operate and maintain the Tube's electrical power network. The contract included a half-way break clause, at which point LU has the option to terminate the contract early. It is now exercising this option.
Powerlink is made up of UK Power Networks, ABB and Balfour Beatty.
LU has served formal notice on Powerlink that the contract will come to an end in August 2013, 15 years before the scheduled expiry date. LU said that it would work with Powerlink over the coming months to ensure a smooth transfer of staff and activities back to LU next year.
LU believes that ‘the move will have no impact on the day to day operation of the Underground’.
LU commercial director Sarah Atkins said: “We've taken a good hard look at every aspect of how we operate the railway and found that we can make significant savings by terminating this arrangement early, avoiding expensive financing costs that would have come with continuing the contract to its end.
“Although the contract has been performing well, the move to restructure the PFI arrangement will give us increased operational flexibility, and mean we can invest the savings made in further transport improvements for our customers.”
- Click here to return to the previous page
- Subscribe to our free construction newsletters
- Buy & Sell Construction Plant Machinery online with TCiTrader.co.uk. Find new, used & reconditioned Construction Equipment. Click here to view Construction Equipment Classifieds.
Download our free construction news iPhone / iPad app. Sign up to our FREE email newsletters or subscribe to our RSS feed for regular updates on the latest Construction News, Plant News, Contract News & Supplier News. The Construction Index also provides the latest Construction Tenders, Construction Market Data & Construction Law Commentary all FREE.
This article was published on 17 Aug 2012 (last updated on 20 Aug 2012).