Re: IEP Spin - The Fallout

On 13 Feb, 13:39, Tony Polson <docnews2...@xxxxxxxxxxxxxx> wrote:
trackmi...@xxxxxxxxxxxxxx wrote:

I also note that the DfT and Hitachi have attempted to defend the
contract by saying that 70% of the value of the contract will be spent
in the UK - well that's not big surprise.. when you consider that at
least 50% will be the maintenance of the trains for the first X years
that leaves around 40% of the actual manufacture / assembly cost to be
spent in the UK, and that probably includes testing.. but even
ignoring that I think we can logically assume that at least 60% of the
actual cost of making the trains will go to Japan. Assuming that the
contract price includes the new depots that may even bring this figure
down further.. so let's be wise and cautious about the "70%" that was
in the original release.

The 70% figure arises because the cost of financing the deal will all be
spent in the UK - with Barclays Bank.  As in any PFI type deal, the
financing of capital costs (building of trains, depots and platform
alterations) plus the net present value of 30 years of maintenance and
renewals are both substantial proportions of the total project cost.

But as you have shown many times, you just don't understand finance.

Can't you just post a sensible comment?

I don't actually think I said anything that contradicts what you have
said - I think I just pointed out that anyone believing that the "70%"
is just a percentage of the actual cost of manufacturing the trains
they have missed the point that the total figure for the order does
indeed cover costs for around 30 years of maintenance etc. which will
obviously be spent mainly in the UK (apart from some Japanese
replacement parts I presume). I actually think we are in agreement.
Sorry if that spoils your argument.

(the figure for the deal may not actually cover maintenance for all of
the 30 years - just as a rider - I think that many orders for design,
build & maintain have covered maintenance for the first 10 years or so
- or to the end of the franchise in the case of the original Pendolino
order - so we need to see the detail before we are clear on this.
There is a view in the industry that whilst letting the manufacturer
maintain new trains for the first few years the operators would love
to take them "in house" eventually).

Tony


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  • Re: IEP Spin - The Fallout
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    (uk.railway)
  • Re: IEP Spin - The Fallout
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    (uk.railway)
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