Transport for London (TfL) has agreed a £98m deal to buy out Tramtrack Croydon Ltd, the company which operates Tramlink services under a Private Finance Initiative (PFI) contract.
Transport officials say the 99 year PFI contact, which was awarded in 1996, before the establishment of the Greater London Authority and TfL, is insufficiently flexible.
Under the terms of the concession agreement Tramtrack Croydon Ltd retains the revenue generated by Tramlink and TfL must make compensation payments for any changes to the fares. Last year that payment was £4m.
Today’s deal, which is expected to be completed by summer 2008 and is subject to Due Diligence checks, hands TfL control of the PFI contract and removes the need to make further compensation payments.
Mayor of London Ken Livingstone said the deal was “excellent news for Londoners.”
“This will mean we can plan how to make the improvements that are required to cater for ever increasing numbers of passengers and provide them with the very best possible services.”
Following completion of the purchase process Tramlink is expected to be managed by TfL’s London Rail directorate.
Peter Hendy, TfL Commissioner, said the deal “represents excellent value for money for London’s fare and tax payers.
TfL have already proposed changes which would take effect as soon as they control of the network including doubling the number of off-peak services between Elmers End and Beckenham Junction.