Abellio pulls out of race to run railway franchise
Dutch-owned transport giant Abellio has withdrawn its bid to run the next Wales & Borders rail franchise and build the next phase of the Metro project.
In a written statement, Cabinet Secretary for Economy and Transport Ken Skates confirmed that Abellio has notified the Welsh Government’s transport body, Transport for Wales, that it had pulled out of the procurement process.
It follows the collapse of its construction partner Carillion and it now leaves just two bidders, MTR and KeolisAmey, in the race to run the rail franchise from October this year and build and design the next phase of the South Wales Metro project with electrification of the Valley Lines.
Last year, the franchise’s current holder, Arriva Trains Wales, also confirmed it would not be submitting a final bid to Transport for Wales, despite spending millions developing a business case.
Abellio’s bid had been made through bid company Abellio Rail Cymru (ARC). It was made with the other two just before Christmas.
Mr Skates said: “Despite the best efforts of the team of experts, lawyers and counsel at Transport for Wales, and the ARC team, ARC has taken the regrettable decision to withdraw its bid, having been unable to overcome the impact of Carillion’s liquidation.
“ARC has participated in the procurement process and has contributed professionally throughout. I want to express my thanks to the ARC team for their hard work during the process. It is unfortunate that, having invested significant time, effort and money into the process, that they should be a further victim of the liquidation of Carillion.”
Mr Skates said that Transport for Wales learned of Carillion’s share price drop in July 2017 and raised this with ARC.
He added: “At this point ARC considered options but elected to stay with its consortium partner, Carillion. As a consequence, Transport for Wales required independent financial guarantees by a bank for Carillion’s performance.
“When Carillion entered liquidation, Transport for Wales asked ARC to provide a proposal which demonstrated that ARC could still deliver the final tender without changing essential elements of it.
“The liquidator has since been in discussion with a number of parties to sell Carillion Rail and to secure jobs, and it was possible that through this process, ARC could have secured the relevant capability. ARC was required to present a firm proposal once the liquidator had made its decision, by 17:00 on February 22.”
A consortium member (Amey) for another bidder yesterday successfully purchased the majority of Carillion Rail from the liquidator.
Mr Skates said: “Whilst this has safeguarded a number of jobs in Carillion Rail, it has unfortunately left ARC unable to secure the capability it would need to proceed. On the evening of Thursday, February 22, ARC informed Transport for Wales of its intention to withdraw from the process.
“Transport for Wales has analysed the robustness and technical capability of the remaining bidders and are confident that they are both capable of providing a high-quality solution that will enable us to transform rail services right across Wales...
“The procurement evaluation will continue and ARC’s withdrawal does not expose the Welsh Government to any financial risk or delay to the process. At the time final tenders were submitted in December, three bidders remained in the process.
“Final tenders were therefore prepared with strong competitive pressure. Final tenders are binding and remaining bidders could not alter them now ARC has withdrawn.
“We have two strong bidders remaining in the process and remain on target to award this exciting contract in May 2018 and to transform rail services in Wales and borders from October 2018.”
A spokesperson for Abellio said: “Following the liquidation of Carillion PLC on Monday 15 January, Abellio Rail Cymru has taken the decision to withdraw from the contract letting process for the Wales & Borders Rail Service and South Wales Metro competition.”