The UK government is to auction off the Channel Tunnel Rail Link as part of a sell-off of key assets to boost the UK’s severely depleted coffers. The sale is expected to reach in the region of £2bn.
The privatization of High Speed 1 (HS1) - the railway Eurostar uses from London to the Channel Tunnel - would provide a much needed boost to the new coalition government as it attempt to reduce the UK’s £167 billion annual debt.
Department for Transport (DfT) and state-owned rail operator London & Continental Railways (LCR) are expected to distribute a sales document to potential bidders ahead of the emergency budget on 22 June, according to The Independent.
Citi and UBS have been instructed as financial advisors and are acting for the DfT and LCR respectively.
A major sticking point was resolved in the build-up to the election campaign.
Network Rail has a long-term contract to maintain and operate the track, which links the UK with the Channel Tunnel. This has been reduced to a five-year term, meaning that any new owner of the track and stations could select a different, potentially cheaper, party by 2015.
Network Rail is one of the favourites to launch a bid for the assets, either on its own or as part of a consortium. The group owns nearly all the substantial pieces of Britain’s rail infrastructure and considers HS1, which include St Pancras, Ebbsfleet and Stratford International stations, a gap in its portfolio.
A source close to LCR told The Independent that £2bn was at the top end of the company’s estimates but achievable.
Last year Groupe Eurotunnel, which runs the Channel Tunnel itself, said that it was eyeing a bid when HS1 eventually came up for sale.
HS1 is one of a number of assets that Gordon Brown said he was preparing to sell for a combined £16bn if he won the election.