£285m... the cost of capital’s tram extension

... and that’s only an extra 2.8 miles

EdINbuRGh’S controversial trams project would be extended at a cost of £285million under proposals unveiled yesterday.

Officials at the City of Edinburgh Council recommended pressing ahead with trying to find a contractor as they published a detailed business case for the 2.8-mile extension.

If councillors approve the proposals, work to extend the line from the city centre to Newhaven could begin in 2019 and it could be operational by spring 2022.

It would mean businesses on Leith Walk – one of Edinburgh’s busiest thoroughfares – would have to endure three more years of roadworks.

They suffered disruption when work began on the original project, only for it to be scaled back when costs soared, with the line ending at York Place in the city centre instead.

The new report puts the cost of the extension at £165million.

however, the Scottish Government has refused to provide a penny more towards the trams project, meaning the council will need to borrow to fund it.

And the business case for the extension states: ‘The associated financing cost of this investment is estimated to be £9.5million per annum over a 30-year period, based on an indicative loans fund interest rate of 4.1 per cent.’

It means that, once interest rates over 30 years are included, the total cost of the extension will be £285million. That will take the cost of the entire project to nearly £1.3billion. however, the business case also indicates there is a risk that costs would rise further.

It states that the financial model provided is ‘based on a large number of assumptions’ and warns that ‘there are a number of risks which require careful management’. It goes on to state that there is a risk that ‘logical errors in the modelling result in misleading projections’.

Passengers finally boarded the city’s trams in 2014, five years after the scheme was due to be completed.

With a Scottish Government contribution of £500million, the council borrowed almost £250million to fund the £776million cost of laying the nine-mile track from Edinburgh Airport to York Place.

Including borrowing, the total cost will top £1billion.

SNP councillor Adam McVey, leader of the local authority, said: ‘Edinburgh is growing faster than any other city in Scotland and our current road network and public transport provision simply aren’t sustainable given the number of new residents we’re expecting... over the next two decades.

‘Rather than exacerbating traffic problems on our alreadycongested roads, trams allow far greater numbers of people to travel while creating employment during construction, boosting development along the route and connecting people to centres of employment, leisure and retail.’

Councillors will make a decision on Monday – a day before the inquiry begins taking evidence in a bid to find out what went wrong with the original project.

‘A large number of assumptions’