Railtrack 'plans new funding plea'

Railtrack could be stuck in administration for longer

Railtrack is preparing ask for £3bn ($4.4bn) of extra funding from the rail regulator to cover the costs of track repairs, the Independent on Sunday reported.

It said Railtrack chief executive John Armitt was drawing up a request for a comprehensive review of Railtrack's finances.

A plea for extra funds could jeopardise a plan agreed by Transport Secretary Stephen Byers to bring the national rail network out of administration, according to the paper.

In March, Mr Byers put forward proposals under which Network Rail, a not-for-profit firm, would take over the running of Railtrack.

Delay to schedule

The package included compensation for Railtrack shareholders, who would receive about £2.50 per share from Network Rail.

Stephen Byers switched track on compensation

They are due to vote on this proposal in June and are widely expected to accept it.

But if Mr Armitt asks rail regulator Tom Winsor to review its finances and grant another £3bn the process could be delayed until early 2003 while Mr Winsor makes his decision.

"Network Rail would be unable to take over Railtrack until the Mr Winsor has concluded his deliberations," according to the newspaper.

Wait and see

However, no such request has yet been made.

"We have not yet received notification from Railtrack that they plan to apply for a review," a spokesman for the Office of the Rail Regulator told the paper.

The submission is likely to be made in July or August, the Independent on Sunday said.

A spokesman for Network Rail acknowledged that it has not planned for a further cash call from Railtrack.

Track repairs

"We are working on the assumption that there won't be an interim review (of Railtrack's funds). That is the way the offer is framed," he said.

The money is reportedly needed because the cost of maintenance and track renewal work rose 21% over a 12 month period in the wake of the Hatfield rail crash.

The fatal crash was caused by a shattered rail and led to widespread track testing and replacement.

Share trade queries

A separate report in the Sunday Times said the Financial Services Authority is conducting an investigation into possible insider dealing in Railtrack shares.

The FSA is investigating a purchase of half a million Railtrack shares made shortly before the shareholder compensation plan was announced, the paper reported.

It said senior officials in the Department of Local Government, Transport and the Regions are to be questioned as part of the inquiry.