London mayor in legal threat over Tube costs ruling

Rail contractor Tube Lines can charge 4.46 billion pounds for its services over the next 7-1/2 years, the statutory Arbiter for the London Underground Public-Private Partnership (PPP) Agreements ruled.

Arbiter Chris Bolt said Wednesday his decision represents an increase of 65 million pounds on his draft directions published in December.

"We are being asked to write a blank cheque in order to prop up failing Tube Lines. In other countries this would be called looting, here it is called the PPP," London Mayor Boris Johnson said in a statement.

"We will fight this to the last and we are therefore examining all our options, including legal remedies."

Tube Lines, whose shareholders are Spain's Ferrovial and U.S.-based Bechtel, signed a 30-year PPP contract in December 2002 to upgrade the Jubilee, Northern and Piccadilly lines.

The figure decided upon by Bolt remains well short of the 5.75 billion pounds that Tube Lines originally said it needed, however.

"We consider that this decision could present Tube Lines with a significant challenge in its efforts to deliver the investment in the Tube that the system continues to require," Tube Lines' Acting Chief Executive Andrew Cleaves said.

Bolt also published his draft directions on charges to be paid by London Underground and on financing, confirming a funding gap.

These draft directions are based on London Underground meeting in full the efficient level of costs directed by the arbiter over the next 7-1/2 years.

(Additional reporting by James Davey, Editing by Mark Potter and Rupert Winchester)