COMMENT – BY BUSINESS EDITOR SION BARRY

I cannot say that Abellio’s decision (through bid company Abellio Rail Cymru) has come as much of a surprise.

The issue was that its construction partner, Carillion, has been liquidated.

That came after it had submitted its bid to Transport for Wales to run the next Wales & Borders rail franchise and electrify the Valley Lines – which with government subsidies over the next 15 years could have added up to a £5bn procurement, the biggest ever awarded in Wales.

Legal teams from both Abellio and Transport for Wales explored every avenue that could have allowed the Dutch transport giant to continue with a new construction partner.

And, in fairness, that takes time to play out. But if Abellio, with a new construction partner, had continued to bid and won, it could have created a bigger problem down the track for Transport for Wales and the Welsh Government.

I am referring to a possible legal challenge from MTR and KeliosAmey. They could have argued that the rules of the bidding process had been reconfigured to allow Abellio to revisit an already submitted bid, but with another main contractor. That possible legal challenge has now been lifted.

But what now for the next 15-year Wales & Borders rail franchise and the contract to design and build the next phase of the South Wales Metro, with electrification of the core Valley Lines, for which there is a ring-fenced budget of £734m?

Well, the good news for the Welsh Government is they still have two first-class bidders with proven track records in rail infrastructure delivery and the running of services – MTR and KeolisAmey. We should know in the spring who is the preferred bidder ahead of final contracts being signed in the summer.

And while there still needs to be a deal done on the transfer of the franchise and the rail asset from the UK Government to the Welsh Government, there are hopefully no ‘show stoppers’ at this late stage to derail the project.