3.1 In the 2002 restructuring, the Department transferred, from Railtrack Group to LCR, the Department's guarantee that Eurostar UK would meet its obligations to pay track access charges for a period of 50 years from the opening of Section 1 in 2003. To reduce the chance of a call on this guarantee, the Department kept in place the access charge loan facility that it had granted to LCR in 1998. LCR can draw down funds from the facility to pay Eurostar UK's track access charges if, as expected, Eurostar UK continues to experience operating cash shortfalls after LCR has exhausted its debt proceeds. The interest rate for the loan is LIBOR plus one percentage point.
3.2 In 1998, the Deputy Prime Minister informed Parliament that the 1997 present value of public sector support provided through the access charge loan facility could reach £360 million (in 1997 prices, calculated from a given cash flow that was discounted using a discount rate of six per cent real). Contractually, however, the 1997 present value of the loan draw downs, net of repayments and the Government's share of revenue from forecast project related property developments, is currently capped at £270 million (1997 prices). The Department can increase the facility to the originally agreed limit of £360 million (1997 prices) subject to state aid approval from the European Commission.