3.28 As reported in our previous report, the Department, in 1998, estimated that LCR's cash short fall, based on the Government's Central Case forecast would result in lending LCR an amount with a 1997 present value of £140 million (1997 prices), net of repayments and the Government's share of revenue from forecast project related property developments. The 1997 present value of public sector support through the track access charge loan facility increased to £360 million under the Government's Downside Case forecast.
3.29 The Department used Booz Allen Hamilton Limited's 2004 forecasts for Eurostar UK's passenger revenues to revise estimates of the 1997 present values of LCR's draw downs of the loan through to 2051. Under the 2004 Most Likely forecast, the 1997 present value of the loan, less repayments and the Government's property development receipts, is about £260 million (Figure 19) on the basis of the current anticipated final cost of the project. This sum increases to just over £390 million (1997 prices) when calculated using the 2004 Low forecasts, but using the 2004 High forecast, the Department estimates that the present value of the Government's receipts exceeds the present value of the loan by about £60 million (1997 prices). LCR expects, in all cases, that it will have repaid the drawn down amounts by 2086 when the concession ends.
19 | 2004 projections of the 1997 present value of the access charge loan net of repayments and revenue paid to the Government for its share of income from forecast project related property developments | ||||||||
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Forecast of Eurostar UK's passenger revenue | Public sector support through the access charge loan facility (£ million, 1997 present value in 1997 prices)1, 2, 3 | Period of drawings on the access charge loan | |||||||
2004 High | (60)5 | 2015 - 2028 | |||||||
2004 Most Likely | 260 5 | 2014 - 2029 | |||||||
2004 Low | 390 5 | 2013 - 2030 | |||||||
Source: National Audit Office's review of Department for Transport data | |||||||||
NOTES 1 The public sector support through the access charge loan facility is net of: ■ expected future receipts of payments to the Government from LCR of 35 per cent of pre tax cash flows from the later of, either 2021, or the date when draw downs from the access charge loan facility cease; and ■ the Government's share of revenue from forecast project related property developments. 2 The present values of the access charge loan have been calculated from estimated cash flows of the loan, net of repayments and other receipts, for the period to 2051 and discounted at the rate of six per cent real 3 Cash flows beyond 2051 have been ignored 4 The cost of the Link equals to sum of the target costs for the two sections. 5 The 1997 present values of the access charge loan, net of repayments and other receipts, for cash flows to 2051 when discounted at 3½ per cent equates to levels of public sector support that are: £400 million in the 2004 Most Likely case; and £650 million in the 2004 Low case. In the 2004 High case, the public sector receives a net credit, the 1997 present value of which is £260 million. | |||||||||