Londoners will have to wait another 9 years before they receive the full sum payable under Emirates airline’s sponsorship agreement for the Thames cable car, Transport for London have confirmed
Mayor Boris Johnson initially claimed the scheme would be built “entirely from private finance”, however he later announced TfL would provide upfront funding and then seek to recoup the £60m construction costs from sponsorship agreements.
While it was known the £36m deal with Emirates lasted for 10 years, TfL’s press office have previously declined to confirm whether the sponsorship sum would be paid over the same period.
In an FOI response TfL has now said initial payments were made “in October 2011, April 2012 and June 2012” and that “the balance will be paid out over the remaining 9 years with a payment due in June of each year.”
The Mayor has already confirmed instalments are not tied to inflation, a provision which could significantly reduce the deal’s worth to taxpayers.
In order to fill the gap between the headline £36m payable under the sponsorship deal and the upfront costs, TfL was forced to apply for an EU grant.
It has also decided not to include cable car fares within capital’s wider fares system, requiring Travelcard and Freedom Pass holders to pay for journeys and exempting the scheme’s fares from the daily Oyster cap.
The Mayor recently claimed it was too early to reconsider the fares policy and said any review would have to wait until more usage data was available.
TfL’s FOI response also revealed the sponsorship agreement is held by its subsidiary Docklands Light Railway Limited, and that it is DLR Limited which is responsible for invoicing Emirates and receiving payment.
Saif says
This is ridiculous financials. London is supposed to be a a city of financial experts – looks like BJ got done (again) for his politicking. Well, I say BJ, I mean London.
Assuming a rather generous 5% discount rate, the present value of that £36m we will get towards the £60m is actually £28.9m so we, in effect, lose £7.1m to inflation (if we assume 5%…which is generous over 10 years).
If you want the calcs, let me know.
Caroline says
What a white elephant. A pedestrian/cycle bridge that was free for everyone to use would have been much cheaper and a whole lot more use. Instead of that, Londoners are servicing debt on a vanity project which most will see no benefit from.
That £36M could have gone towards improvements to dangerous junctions, improving cycle networks, putting a tramway down oxford circus… Any of which would have helped improve the congestion problems on London roads and made London more pleasant to get around. A pay-per-ride cable car across the thames does not benefit anyone except tourists and Emirates, it is not something that should be funded from the transport budget.
ASLEF shrugged says
Caroline – we wouldn’t have got Emirates £36m if there hadn’t been a cable car but the £60m Boris spent on it could have gone towards other projects. Add to that the £160m spent on 600 Boris buses, less than 10% of all buses in London, along with the £140m spent on the Boris Bikes which TfL have no idea when it will break even and Boris’s transport policy is a disaster.