12.09.18
Network Rail to pilot private financing with several ‘contestable’ renewals schemes
Network Rail has published a list of projects for which it is seeking third-party funding as part of plans to open the organisation up to outsiders – including two private financing opportunities and a series of small-scale ‘contestable’ schemes.
As part of the Open for Business programme, about which both David Ollerhead and Mona Sihota have written for RTM, the infrastructure owner published an updated list of projects that third parties can help deliver.
Two of these are private-financing initiatives: the construction of a new 5.5km-long rail line connecting Heathrow Airport to the western mainline, and elements of the East Coast Main Line South Digital Railway, which will implement ETCS and Traffic Management systems from Kings Cross to Peterborough.
Other, smaller renewal works up for grabs are potentially going to become pilot contestable projects. These are funded schemes that can be delivered by parties other than Network Rail “where it is safe to do so,” and differ from the traditional contracting process because the delivery manager role is offered to the market as part of the deal.
Jeremy Westlake, Network Rail’s chief financial officer, said the schemes are a response to “considerable private sector appetite to finance long-life secure assets such as railways.”
“We have established a dedicated team to identify suitable opportunities for this and to work through key issues,” he added. “We have a number of private financing projects as pathfinders in our current opportunities for third parties and these are, by definition, contestable.”
The full list of opportunities can be found here.
Westlake also clarified that Network Rail will adopt a phased, evidence-based approach to third-party financing.
The infrastructure owner will use the renewals pilots to help test its decision criteria for contestable projects and, as its experience and capability grows, it will offer larger and higher-risk projects.
“The volume and type of projects to be offered will initially tend towards the smaller, simpler and lower risk projects, for example, certain types of bridge repairs or car park resurfacing, while capability and capacity is developed,” the CFO wrote. “The benefits of increased value for money, innovation and creativity will be monitored and the opportunities for third parties will be adjusted accordingly.”