With reference to this inquiry, we would be pleased if you would draw to the committee's attention the attached proposal[1] for a purchase and lease back of the existing rolling stock. We have also provided a mechanism for the complete replacement of the existing fleet again on a lease basis with an option to purchase at the expiry of the lease.

  Porterbrook strongly believes that only through innovative public private partnership solutions such as our lease proposal, will the people of Northern Ireland get the new rolling stock they require and deserve.

25 April 2000

TRAIN SERVICE PROVISION TO NIR

  I would like to offer the attached unsolicited contribution to the debate on the way forward for train service provision in the Province.

  Porterbrook has experience of offering contract hire arrangements where the risk of train service provision is passed from the public to the private sector. I believe that this can be adapted to the Northern Ireland situation and would propose the following arrangement as a start point.

1.  I attach as Appendix 1 a summary sheet showing the current fleet in NIR.

2.  Porterbrook would purchase this fleet and all spare parts for say [£1 million].

3.  NIR would award Porterbrook a contract for say [10] years for Porterbrook to provide sufficient trains to meet the timetabled requirements of NIR on a daily basis. The start point of the agreement would be the current mileage operated by NIR and this could be changed twice yearly by NIR and any increase or decrease in mileage would cause an appropriate pre-agreed adjustment in the monthly charge paid by NIR to Porterbrook for train service provision.

4.  If Porterbrook caused a train to be cancelled owing to not providing a unit for a working, a rebate of charge would apply. Similarly if a train breaks down in service or if a train enters service with a toilet locked out of use, a rebate or reduction in charge applies.

5.  NIR would provide drivers, all station staff and all infrastructure. NIR would carry out infrastructure maintenance. Train maintenance staff would be transferred under TUPE arrangements to Porterbrook's maintenance provider. The provider would pay NIR a rent for the use of facilities required for train maintenance eg York Road under a depot access agreement.

6.  At the end of year 10, the rolling stock listed in Appendix 1 together with spare parts would be returned to NIR in a serviceable condition, unless the rolling stock has been replaced on a "seat for seat" basis by Porterbrook when the following arrangements shall apply.

7.  If new trains are provided, NIR shall have the option at Year 10 to purchase the trains for the pre agreed residual value (or arrange for someone else to buy them such as an incoming franchise operator). Alternatively NIR could enter into a lease agreement with Porterbrook for that rolling stock, or NIR could accept the old rolling stock back.

8.  Porterbrook shall have the option of returning the old rolling stock or of "putting" (as in a put option), the new rolling stock to NIR at the pre agreed residual value price or of entering into a lease agreement with NIR.

  The above is a broad outline idea which if pursued, would be subject to the approval of Porterbrook Board of Directors. We fully understand that such a concept as this would need to be publicly tendered, but we believe that Porterbrook is uniquely placed to offer the best solution. Besides our current activity in contract hire, we also have large numbers of English Electric engines of the types used in the Class 80 and 450 fleets used by NIR and could improve the spare parts availability situation by increasing float, and through economies in the supply chain from the procurement strength we enjoy as purchasers of £90 million of heavy maintenance activity in the UK each year.

  Our Adtranz Turbostar fleet of new trains now comprises orders for a total of 210 vehicles of which 140 have already been delivered to four customers.

  The mechanism outlined here would give us an incentive to order more and be assured of a well-rated primary lessee. NIR would benefit from Porterbrook's procurement clout in this marketplace.

  I would be pleased to talk further about this opportunity on a "no commitment either way" basis if this would assist.

25 April 2000