Proceeds from the sale of London Underground will be `recycled to ensure that the modernisation of the underground’s infrastructure is completed as quickly as possible,’ transport secretary Sir George Young said on Tuesday.
The aim is to finish modernisation – actually a £1.2bn backlog of long-needed investment – within five years of privatisation.
Though no sum was put on the investment income expected from the sale, Young said the underground estimated that the upper limit for `sensible investment’ each year is around £750m, of which £350m is needed to maintain the network and renew assets.
Industry expectations are that the sale of the network could raise £1bn to £2bn. Young expects this to clear the investment backlog.
Three sale methods are being considered: selling it as one business, selling lines one by one, and the British Rail method, with one firm taking over the track, with lines franchised out.