A new financing agreement has been confirmed for the Crossrail project by Transport for London (TfL), the Mayor of London, and the Greater London Authority (GLA).
In a fresh blow for the new high capacity railway that is set to improve journeys in London and the South East, further delays are expected, increasing the financial strain on the development.
Originally set to open its first section in December 2018, this was pushed back to autumn 2019 earlier this year.
However, those in charge of the Crossrail project say it “has now become clear” that even more work is required to ensure the infrastructure is completed, before the extensive testing commences to ensure safety and reliability.
It means that even the autumn 2019 opening date cannot be guaranteed; Mark Wild, Chief Executive, said the Crossrail project team is working to implement an deliverable schedule.
The financial fruits of this labour will therefore be delayed by more than nine months, which puts a huge hole in the income streams that TfL will have planned for.
Finance and governance reviews are currently underway, but the findings available reveal the cost impact of the project delay that was announced in August will be in the region of £1.6 billion and £2 billion, which includes the £300 million contribution from the Department for Transport (DfT).
It means an estimated £1.3 billion to £1.7 billion is required to complete the project.
To cover these costs, the GLA will borrow up to £1.3 billion from the DfT; the GLA itself will provide £100 million, taking the financial package to £1.4 billion to complete the project.
A contingency arrangement between TfL and the government has been put in place in the form of a loan facility from the DfT of up to £750 million, in case the final costs are actually higher.
This combined financing replaces the need for the interim financing package offered by the government in October.
Mark Wild said: “My team and I are working to establish a robust and deliverable schedule in order to give Londoners a credible plan to open the railway and provide a safe and reliable service.
“Once that work is completed, we will then be in a position to confirm a new opening date.”