London Underground (LU) has requested the PPP Arbiter to provide guidance on costs that metro upgrade concessionaire Tube Lines may incur in future, while its parent Transport for London (TfL) last month took control of the other, failed, concessionaire Metronet.

The tube owner has asked the PPP Arbiter to give guidance on the costs that Tube Lines could incur in the second 7.5 year period of its public-private partnership (PPP) agreement and performance levels. The guidance requested is a formal procedure under the PPP agreement.

Guidance from the PPP Arbiter is expected to be given to LU by early September, as requested. Last month the parties were brought together for initial discussions and in June the process will move to detailed the submission and response stages between LU and Tube Lines. Ongoing discussion will then proceed over the coming months to establish final guidance and technical reports.

Tube Lines is responsible for the infrastructure improvements on the Jubilee, Northern and Piccadilly lines.

The focus on potential costs is acute following Metronet going into administration over extra costs and dispute with the client over reimbursements. Last year Metronet requested the PPP Arbiter to assess its claims but the significant shortfall on the merited reimbursement led it into financial crisis. The business went into administration and only emerged from that process last month when TfL took over the business and its responsibilities.

TfL said that it plans to invest approximately US$2.8bn through Metronet in station upgrades, rolling stock and signalling in the present financial year. Work is continuing on 22 stations following activities on 39 other stations. TfL said that design work is underway on the same number of stations again.

Metronet, via two sister businesses, is responsible for the renewal and upgrades on the Bakerloo, Central, Victoria, waterloo & City, Circle, District, Hammersmith & City and Metropolitan lines.

Tube Line and Metronet were awarded their PPP deals in 2003, and the cost management is being performed in four 7.5 year period.