A British policy shift that could allow individual railroad operators to own track has raised fresh questions about how the privatization program for British Rail ultimately will take shape.
Under the terms of the sell-off plan for state-owned British Rail - which provides virtually all rail service in Britain - the railroad would be broken into 25 regional passenger franchises and three freight services that would be auctioned off.Beginning April 1, all stations and track would be controlled by a separate government-owned entity known as Railtrack. Purchasers of passenger franchises or the freight services would pay a fee to Railtrack for the use of its assets.
It was originally envisioned that Railtrack would own and control all the track, but earlier this week the government cleared the way for a budding rail group - known as the Central Railway Group - to negotiate for the purchase of track in the Midlands, southern England including London and up to the Channel Tunnel, which opens this spring.
An official with the Department of Transport said it was now up to railroad operators to negotiate with Railtrack for the purchase of track and for Railtrack to decide whether it was in the company's interest to part with certain routes.
"The bottom line is that it's for Railtrack to say yea or nay," the official said.
But, Michael Butcher, managing director at Central Railway, said that unless private investors were given a substantial degree of control over their investment the privatization program was headed for trouble.
"You wouldn't expect private investors to put up money for something they didn't own and we're trying to attract as much private capital as possible," Mr. Butcher said.
The company - which would be a "piggyback" operator carrying trucks on flatcars - estimates it will need to spend UK2.1 billion ($3.15 billion) to buy up existing lines, build underground rail tunnels and refurbish old tracks.
"What we're looking to do is acquire the corridor," Mr. Butcher said.
But Railtrack Chairman Robert Horton earlier this week indicated opposition to the sell-off of his company's track to rail operators. In a speech to Chartered Institute of Transport in London, Mr. Horton said Railtrack would be responsible for safety and for preserving the network.
There is "no necessary logic" to a vertically integrated company comprising rail and track, he said, alluding to the fact that British Airways has achieved a high degree of success without owning Heathrow Airport.
He said separation of track and railroads will make it easier to calculate costs, maintain high levels of safety and allow for competition across routes.
Shipper groups, too, have expressed concern that should a private railroad purchase track, it would have little incentive to offer access to competitors at reasonable rates.