On private lines

Nottingham is set to follow Sheffield and Manchester by reintroducing trams to its streets by 2002. Construction of the first Nottingham Express Transit line is set to start later this year; when complete, 15 trams will connect the city centre to Bulwell in the north, and via a spur to a park-and-ride terminus near junction […]

Nottingham is set to follow Sheffield and Manchester by reintroducing trams to its streets by 2002.

Construction of the first Nottingham Express Transit line is set to start later this year; when complete, 15 trams will connect the city centre to Bulwell in the north, and via a spur to a park-and-ride terminus near junction 26 of the M1.

The 23-stop route will comprise 4km of on-street tram lines, 8km running alongside the NottinghamWorksop Robin Hood rail line (which will be moved across to make space) and 2km for the spur on a disused route. If line one is a success, four others could follow.

In a significant shift, the line’s design, build, finance and operation (DBFO)contract has been awarded as a Private Finance Initiative, rather than grant-funded, concession. It is the first PFItransport scheme involving a local authority and the biggest PFIscheme so far in which a local authority is a partner.

The 30-year concession to build and operate the line was won by the Arrow Light Rail consortium, led by Adtranz Total Rail Systems with construction group Tarmac, local bus operator Nottingham City Transport and French tram operator Transdev.

Adtranz Total Rail Systems handles turnkey projects, concessions, and acts as a system integrator for any project involving the supply of two or more electrical and mechanical subsystems. It also provides finance through links with banks and export credit agencies.

Keith Rands, Arrow Light Rail chairman and managing director of Adtranz Total Rail Systems, believes the Nottingham Express Transit line will be ‘a fine example of a seamless integrated transport scheme’ a central feature of last year’s Transport White Paper. The route includes an interchange with the Midland main line; three interchanges with the Robin Hood rail line; five park and ride sites; and feeder bus services run by Nottingham City Transport.

Arrow will let two contracts: a £100m-plus contract to a consortium of Adtranz and Tarmac to build the line and install the trams and associated systems, such as signalling and ticketing; and an operations service contract with NCT and Transdev to operate and maintain the system. Because these will be essentially fixed-price contracts, Arrow’s financial risk centres on ticket revenue.

Arrow raised the capital to fund construction through the project development and tendering stages, which it undertook at its own risk. Loans become due for repayment when revenue service starts.

Ticket revenue alone will not be enough to pay off the loans, pay the operation and maintenance costs and provide a return for investors. It will be topped up by a monthly ‘availability payment’ from government in the 27 years of the concession after the line is built, against strict performance criteria. Unlike a grant, it will not count as part of the public sector borrowing requirement.

‘If it doesn’t work reliably we will be penalised through the availability payment,’ says Rands. ‘The risk transferred to the private sector is very high.’

The trams, to be built by Adtranz in Derby, will be a variant of the proven Eurotram design used in Strasbourg, which has also been ordered by Milan and Oporto.

Some UK tram schemes have failed to meet expectations, butRands says Nottingham has several factors on its side. Because the DBFO contract has been let to a single entity, the scheme has been designed from an operator-led perspective; it will be integrated with other transport systems; on the street sections, trams will have priority over other vehicles; journey times will be less than by bus; and the main bus operator is part of the consortium, not in competition. The radial route to the city centre, a frequent service and real-time train information at stations are designed to maximise passenger numbers.

‘The scheme required a big investment risk for us, but that translates into a level of commitment,’ says Rands. ‘The costs are high but the rewards are there if you stick with it. We hope to use the same model elsewhere in the world. It shows what can be done in transport integration on a private finance basis.’

Project timetable

1994:Private Member’s Bill giving powers to construct the line gains Royal Assent. Nottingham City Council and Nottinghamshire County Council form Greater Nottingham Rapid Transit (GNRT). It compiles a business case, with contributions from local business organisations, and designs line-one route.

1995:Arrow carries out an independent feasibilty study. Having looked at design issues, operation and maintenance costs, it confirms that GNRT’s business case is viable and that the scheme passes government funding tests.

October 1997: Arrow consortium beats four others to win PFI contract to design, build, operate and maintain the line.

December 1998: Government announces revenue support of £167m for scheme.