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No guarantees on cost, admits tram boss

The chief executive of the Edinburgh tram agency has retreated from previous statements that the project could be completed for £600 million, raising speculation that the estimated price has gone up once again.

In an interview with the Sunday Herald, Richard Jeffrey, who runs Transport Initiatives Edinburgh (TIE), also gave the clearest indication so far that the unfinished work by contractor Bilfinger Berger across the entire western line into the city would have to be retendered in the event of the contract being terminated, a process that would take many months.

The fresh questions about the cost of the project come after the latest report by council officials was submitted to councillors last week for this Thursday’s monthly meeting.

It omitted the advice in the preceding June report that £600m would cover the full line from the airport to Newhaven, an amount that was itself a substantial increase on the original £512m estimate and is thought to be at least £100m shy of what Bilfinger believes the line will cost.

The new report recommends that the line only go as far as St Andrew Square in the heart of the city as a first phase, and is virtually silent about Newhaven.

Asked whether the change in language about the costs meant that TIE no longer stands by its previous estimate, Jeffrey said: “The June paper was based on assumptions that we would be able to resolve the contract dispute and would have a contractor working to an agreed programme in a manner that was reasonable.

“Another four months have gone by and we haven’t resolved that deadlock.

“There hasn’t been as much progress on the project as we had anticipated. Given the current uncertainties, we are not in the business of revising projections at this time. The situation is less certain that it was in June.”

He would not be drawn on the fact that the decision not to withdraw the £600m recommendation for the new first-phase proposals might indicate that TIE now believes that that amount is necessary to merely reach St Andrew Square.

He said: “I won’t ask for more money until I am certain it’s required. We are in a position where we are saying that it’s unlikely there will be a commercial settlement in the near future and we are alerting the council to the fact that we may come back at some point with a recommendation to terminate the contract.”

Asked if this means that the Bilfinger civil engineering work will have to be fully retendered, he would not rule it out. He said: “We are looking at all the options. I am not going to prejudge that.”

Neither did he want to speculate on whether this option would also mean terminating the activities of Bilfinger’s consortium partners, Siemens and CAF. TIE is proposing to allow two more months of last-ditch negotiations with Bilfinger before deciding whether to terminate, a move that looks likely to end in a court battle.

The report also said that stopping the tram at St Andrew Square would mean foregoing about £7m in development costs from businesses in the Leith area, pushing the probable council borrowing requirement to reach the current £600m estimate to around £91m. It is understood the new proposal also means the tram will be unprofitable for three years rather than the 18 months in the original business plan because of the lost potential passengers, and that 10 of the 27 trams being built by CAF would not be required. Jeffrey would not say whether TIE has the contractual power to prevent them being built, but confirmed it is looking at options for the surplus.

He insisted the size of the three-year subsidy from Lothian Buses, which would be subsumed along with the tram by the Transport Edinburgh Limited company, is commercially sensitive. He said ticket prices will not be put up as a consequence of the subsidy.

It also emerged that any line to St Andrew Square would still have to run to nearby York Place to allow the vehicles to turn.

Steve Cardownie, deputy leader of the council and long-time tram critic, said: “This proposal is not about a phased introduction but about a cut. The people of the city were promised a line running from Newhaven to the airport. What they will get is something that will run to St Andrew Square and cost more than the original estimate for the whole project. It’s a complete and utter mess.”

Richard Jeffrey, Transport Initiatives Edinburgh

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