World Economy

UK Railways on Privatization Drive

UK Railways on Privatization DriveUK Railways on Privatization Drive

Network Rail has started the sale of its power network on Friday (March 4) in an effort to streamline the state-backed company.

The infrastructure operator launched the market-testing exercise as part of a £1.8 billion ($2.56 billion) property sales drive, which it is hoped should help fund Network Rail’s £40 billion (almost $57 billion) investment for its five-year plan, IBTimes reported.

The move followed a six-month review by KPMG, a global network of professional firms providing audit, tax and advisory services, and is part of a drive to explore the options when it comes to the company’s power assets.

Network Rail owns thousands of cables and about 120 power substations, which will be sold to energy companies or private investors. The company signaled that the assets could also be leased or that private companies would run them for the network operator.

“Continuing the historically high levels of investment in our railway that we’ve seen over the last decade is absolutely vital if we’re to provide the railway Britain needs in the years ahead,” Network Rail chief Mark Carne said. “Better railways drive economic growth, housing and jobs.”

As part of the streamlining restructure, it is also hoped cash will be raised from 7,500 commercial property sales. It has further listed stations, land for housing, telecom assets and depots as possible selling targets but is also looking into other ways of raising money through the assets.

Its investment plan will run until March 31, 2019. The company added that it hopes to provide more capacity, decrease crowding and adapt to the accelerated railway growth and demand.

Secret Talks

Meanwhile, Tory Transport Secretary Patrick McLoughlin is secretly courting venture capitalists seeking to profit from the privatization of Network Rail, the Morning Star revealed.

McLoughlin has personally met representatives of UBS Bank and Infra Capital to gauge interest about a break-up from potential buyers.

A source at the meeting held two weeks ago described how they discussed which parts of Britain’s rail infrastructure would be profitable enough to sell.

It is the clearest sign yet that the government’s Shaw Report into the future of Network Rail will recommend its privatization when it’s published later this month.

‘We Own It’ campaign director Cat Hobbs told the Star: “The fact that the Department for Transport is meeting investors shows the direction of travel—towards privatization and fragmentation of the rail network.

“But even the DfT aren’t sure of the best route to get there, which is why they are asking bankers for help.”

Asked about the liaisons, the DfT said the transport secretary “regularly meets with a range of experts, including senior figures in transport and business, academics and union representatives, to discuss the future of the transport industry.”