Today’s announcement from the UK Department for Transport that it’s formally awarded (but still not signed) the public-private partnership contract for Thameslink trains to the Siemens’led consortium is hardly a surprise. It comes just two days after credit ratings agency Moody’s announced it had assigned an A3 rating to the £1.585 billion of debt that will finance the project (which costs about £1.75 billion, regardless of the £1.6 billion figure being bandied about).
I will be blogging more about this shortly, but for now I can reveal something worth noting.
Siemens has already invested its money in at very least designing, and possibly also building, the 1,200 train carriages. This is significant. Normally in a project finance deal such as this, no money, be it equity of debt, is spent until all the financing has been agreed, signed for and is available to spend (‘financial close’). But in this case, Siemens decided to get an early start and risk spending money despite not being covered by a contract. This may be because the DfT wants (and the contract will require, according to the recent National Audit Office report) the first batch of trains in two and a half years’ time, and since they are a new design that has to be made compatible with the line, stations and power supply*, time is tight.
Want to know why it took two years from announcing Siemens as preferred bidder to get this far? I’ll explain next week when I’ve got time. In the meantime, ignore ignorant people suggesting the contract could’ve been awarded to Bombardier. It couldn’t.
*The power supply is particularly tricky as there are two types of electrification on the Thameslink route – overhead lines in the north and an electrified third rail in the south. The new trains will be able to accept power from both sources.