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Metronet is facing administration Metronet is facing administration
(20 minutes later)
Tube maintenance company Metronet is facing the threat of administration unless a last minute rescue plan can be found, the BBC has learnt. Tube maintenance company Metronet is facing the threat of administration unless a last minute rescue is found.
The firm needs an injection of cash to stay afloat and keep operating, BBC business editor Robert Peston said. The firm, a public-private partnership (PPP), had asked London Underground for £551m to cover extra costs as it upgraded parts of the tube system.
The threat of collapse was triggered by a decision to limit the amount of money Metronet would be given, he added. However, the regulator that oversees PPPs, which use private sector money to fund public projects, awarded the firm £121m, triggering the current problems.
Metronet has been under fire since a report found that it would overspend by about £750m on maintenance contracts. Metronet said that its board will meet on Monday before making a statement.
The company, a flagship of the government's Public Private Partnerships (PPPs), which use private sector money to fund state projects, has been embroiled in a battle over who should foot the bill. 'Intervention'
"Metronet has been a disaster for its owners, WS Atkins, EDF, Balfour Beatty, Thames Water and Bombardier," the BBC's business editor said. "Metronet has been a disaster for its owners, WS Atkins, EDF, Balfour Beatty, Thames Water and Bombardier," the BBC's business editor Robert Peston said.
"Unless there's a last minute intervention by the Treasury this morning, Metronet will go into administration today," Mr Peston added. "Unless there's a last minute intervention by the Treasury this morning, Metronet will go into administration today," he added.
The BBC's business editor explained that the latest problems at Metronet had been triggered by a decision of the PPP arbiter to award only a fraction of the cash Metronet said it needed to keep going over the coming year. "The losses for Metronet's lenders may run to hundreds of millions of pounds."
The arbiter's role is to ensure that this largest of PPPs delivers value for money. Metronet is responsible for maintaining London's Bakerloo, Central, Victoria, District, Circle and Metropolitan tube lines.
The company had planned to invest £17bn over the next 30 years under a PPP scheme.
However it has estimated there will be a £1.2bn overspend after seven-and-a-half years.
The company has been embroiled in a battle over who should foot the bill.