Balfour Wins Part of $3.3 Billion U.K. Rail Electrification

Network Rail Ltd. awarded contracts to Balfour Beatty Plc (BBY) and three joint ventures for work on a 2 billion-pound ($3.3 billion) electrification program aimed at cutting journey times and adding capacity on U.K. railways.

When the project is completed, more than half of Britain’s tracks will be electrified and electric trains will account for three-quarters of traffic, the network operator said in a statement. The seven-year program is split into six regional frameworks with potential for three one-year extensions.

“Our work to electrify 2,000 track miles represents the biggest program of rail electrification in a generation,” Simon Kirby, managing director of the infrastructure projects unit, said. “The framework approach chosen by Network Rail gives suppliers a greater degree of certainty about the company’s pipeline of work and means suppliers can target investment.”

The electrification includes the Great Western and Midland main lines and the “electric spine” serving freight trains from Southampton. CarillionPowerlines, a joint venture of Carillion Plc (CLLN) and SPL Powerlines, will deliver two regional frameworks, as will ABC Electrification, a venture between Costain Group Plc (COST), Alstom SA (ALO) and Babcock International Group Plc. AmeyInabensa, a joint venture of Ferrovial SA (FER)’s Amey unit and Inabensa, was awarded one framework, as was Balfour Beatty.

Investment Plans

“This is a major and very welcome step in the transformation of the railway,” Jeremy Candfield, director general of the Railway Industry Association, said in the statement. “It will encourage suppliers to invest in the training and equipment needed for the growing national electrification program.”

Electric trains are faster, more reliable and better for the environment, releasing fewer CO2 emissions than diesel, Network Rail said. Improved acceleration from stations means more trains can also be accommodated over a given period, boosting overall capacity.

Balfour Beatty won a 75 million-pound contract for work including the Manchester to Preston route, which will allow electric express trains to travel directly to Glasgow. Britain’s biggest construction company has already participated in the first two phases covering the Liverpool to Manchester route, the London-based company said today in a statement.

Share Performance

Balfour Beatty shares rose 0.5 percent to 284.40 pence as of 1:55 p.m. in London, extending the 12-month gain to 6.6 percent percent. The company is concentrating on winning more profitable business, and said on Jan. 14 it wouldn’t rebid for a Network Rail track-renewal contract set to expire at the end of the first quarter of 2014.

Shares of Babcock and Carillion gained 0.2 percent, while Costain fell 0.3 percent. Alstom rose 0.2 percent in Paris and Ferrovial declined 0.3 percent in Madrid.

CarillionPowerlines looks “forward to building on the strong partnership we already have with Network Rail, as we work together to deliver these vital improvements to the U.K. rail network,” Carillion Chief Executive Officer Richard Howson said in a statement.

To contact the reporter on this story: Morgane Lapeyre in London at mlapeyre@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net

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