A PRIVATE company has been lined up to take over the reigns of Edinburgh's ill-fated tram project ahead of a decision next week to press ahead with a truncated section of the route.

Turner & Townsend, an international management company with experience of delivering tram projects in Dublin, Croydon and Nottingham, is expected to be appointed as project manager, while council-owned company Tie will be wound down, it was confirmed yesterday.

The news came as it emerged City of Edinburgh Council is likely to end up paying £15 million a year -- around twice the amount previously estimated -- over the next 30 years under plans to borrow more than £200 million to address a funding gap.

The decision to scrap Tie, which was responsible for pursuing an ultimately unsuccessful two-year dispute with lead tram contractor Bilfinger Berger, was welcomed by politicians yesterday. However, Labour and the Tories said they had “grave” concerns frontline services would be cut in order to meet the loan repayments.

A report due to be published today is expected to recommend borrowing up to £230m to com-plete a section of the route between Edinburgh Airport and St Andrew Square in the city centre. The line was due to go to Newhaven Harbour, east of the city.

This will leave residents in Edinburgh paying £15m a year in loan repayments for the next 30 years, Gordon Mackenzie, the council’s transport convener, said yesterday. A report to the council in June had put the cost of annual repayments at between £7.1m and £10.6m.

Turner & Townsend were appointed this week to carry out a review of the project, though sources said the firm was “in the frame” to take over as project manager once this was complete.

Around 30 staff remain at Tie after half the workforce accepted a voluntary redundancy offer earlier this summer. They were briefed about the management changes on Wednesday.

Sources said winding down Tie would save costs as the council would be given a greater role in managing the project.

Mr Mackenzie said some individuals who had made a “substantial contribution” to the tram project within Tie would be kept on, though it is not yet clear how many people will be in that position. He said “ball park” estimates were that the council would have to pay £15m a year over 30 years, though he added that exact figures were still being worked out last night.

“There have been problems with project management and we need a fresh pair of eyes to look at it. Turner & Townsend have expertise in delivering tram projects, having just come off the Dublin project, which is positive,” he said. “The council don’t have anyone in-house that have built a tram system before. People have done road works with contractors but this is a much bigger project than anyone in-house has dealt with.”

The council had hoped to raise £20m by leasing 10 of its fleet of 27 new tram vehicles to the system in Croydon but the deal fell through earlier this month.

However, a council source said yesterday the cost of repaying the loan could be met without cutting services by drawing on other funding streams such as dividends from council-owned Lothian Buses. A change in the council’s loan agreements with the Treasury is also due to deliver savings as interest payments are cut, the source said.