A £300 MILLION rail link to the Borders will be built by Network Rail after the collapse of a government bidding competition.

In a humiliating climbdown, Transport Minister Keith Brown admitted he had abandoned plans to enlist a private company to build and maintain the 30-mile route between Edinburgh and Tweedbank after two out of three bidders withdrew.

Instead, Network Rail, which owns and operates Britain’s track and signalling, will be parachuted in to deliver the project, taking it over and maintaining it along with the rest of the rail network when it is complete.

The move is likely to see the timetable for delivery slip and could see costs increase, although Mr Brown said he was still “committed” to completing the project by December 2014. It is budgeted to cost between £235 million and £295m.

The link will re-establish passenger railway services on the former Waverley route for the first time since it was axed in 1969 as part of the Beeching cuts.

But the project has been hit by delays, with critics questioning whether the Non Profit Distributing finance scheme favoured by the SNP -- a form of PFI in which profits are capped -- would work for a major transport infrastructure scheme.

Plans to maintain the route separately from the rest of the network were also said to have pushed up costs as economies of scale would not be available.

Network Rail is understood to have offered to build the railway for under £200m years ago, although this was rejected in favour of the procurement method dropped yesterday.

A spokesman for the company declined to confirm whether it would now be completed according to the Scottish Government’s timetable and budget.

“We will deliver the new line as quickly as possible and are aware of the timelines and budgets the Government would like to meet. We will now review the progress the project has made so far and put in place a plan for its delivery,” he said.

After delays to the procurement competition, one consortium, IMCD, pulled out last summer and another, New Borders Railway, followed in November last year after the loss of one of its key members -- American firm Fluor.

Mr Brown said: “We continue to be steadfastly committed to this vital scheme and we are actively managing and making prudent decisions to ensure efficient delivery as quickly as possible. Despite early enthusiasm from bidders, it is disappointing two consortia dropped out for their own commercial reasons.

“Following the withdrawal of IMCD from the procurement in the summer, we said we would consider our options to find the right way forward to deliver the project for the best value in the shortest possible time. Today’s announcement concludes that process.”

Opposition parties lept on the decision as evidence the Scottish Government had pursued a wrong-headed strategy in procuring the project.

Liberal Democrat transport spokesman Jim Hume said: “With problem upon problem with external contractors, the Government has had to perform an embarrassing U-turn to get this project back on track.”

Jackson Carlaw, Conservative transport spokesman, said: “Following the tram fiasco in Edinburgh, the SNP can ill-afford a further infrastructure disaster, but by ending competition to build the Borders Railway I fear we are on course for that.”

Scottish Labour leader Iain Gray said: “This is another infrastructure shambles of the SNP’s making -- the same SNP Government which cancelled the rail links to Glasgow and Edinburgh airports and allowed the Edinburgh trams project to descend into chaos. Labour has said all along that their non-profit distribution model would not attract private investment to projects like this.”