TUBE PPP ARBITER APPOINTMENT

4 Dec 2002 11:15 AM

Economist and industry specialist Chris Bolt was today appointed as the Arbiter of the Tube Public Private Partnership (PPP) by Secretary of State for Transport, Alistair Darling.

The PPP Arbiter is independent of Government and London Underground. His main role is to decide the fair price for the infrastructure services and improvements provided by private sector consortia, Metronet and Tube Lines, if asked to do so.

Chris Bolt will take up appointment at financial close of the PPP competitions.

Notes to Editors

1. Biography
- Chris Bolt, 49, was until recently Group Director of Regulation and Public Policy at Lattice Group, and a Director of Transco plc. He is an economist and senior manager with direct experience of the water, rail, telecommunications and energy sectors and wide knowledge of Public Private Partnership (PPP) and Private Finance Initiative (PFI) contracts.
- He joined Transco in 1999, where his primary responsibility was to plan and present Transco's proposals to Ofgem (the Gas and Electricity Regulator) on price control. Following completion of the review, he moved to a new role in Transco's parent company (Lattice) where he developed and implemented regulatory strategy and public policy issues. For seven months before joining Transco he was appointed as Rail Regulator.

2. London Underground PPP
- Under the PPP, three private sector infrastructure companies ('Infracos') will maintain, renew and upgrade London Underground's infrastructure under 30-year service contracts. London Underground will remain in the public sector providing the train and station service to its customers. Metronet will manage two of the Infracos, and Tube Lines the third.
- The PPP will create a long-term relationship between London Underground and each Infraco. Many aspects of this relationship will be fixed at the start. However, it would not be practical for Infracos to submit fixed prices for the whole 30 years, nor would it be good value for money. Similarly, London Underground could not confidently predict its service requirements for the distant future. Accordingly the PPP allows for "periodic reviews" of the contract every 7-1/2 years.

3. The PPP Arbiter's role
- The PPP Arbiter will ensure that any disagreements about the price to be paid for infrastructure services under the PPP contracts are resolved swiftly and independently.
- These questions may arise at the "periodic reviews" of the PPP contracts, every 7-1/2 years. The periodic reviews will allow the Mayor and London Underground to re-specify what they require from the private sector. This allows flexibility in responding to the changing needs of passengers.
- The Arbiter will ensure that any re-pricing of the contracts is fair. To do so, he will take account of what an economic and efficient infrastructure company would achieve.
- The Arbiter will also provide direction and guidance on any PPP contractual issue which London Underground and the infrastructure companies refer to him.
- Questions are likely to be wide-ranging and will require a detailed understanding of the contracts, the commercial issues surrounding them, the economic and efficient price for delivering on the contracts, and the constraints and risk appetite of the financial markets. The Arbiter will therefore require a number of specialist advisers.
- At any time, either party can ask the Arbiter for guidance as to how he is likely to treat a question at the following review. "Extraordinary reviews" can also be called in certain
circumstances, when the Arbiter would advise on possible adjustments to the payments made by London Underground to the Infracos.
- The PPP Arbiter is a four-year appointment made by the Secretary of State under sections 225-226 of the GLA Act.

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