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Case 13: Channel Tunnel UK

In: Project Finance

Author

Listed:
  • B Rajesh Kumar

    (Institute of Management Technology)

Abstract

Channel tunnel is also known as the Eurotunnel. The 50 km long channel tunnel link Folkestone Kent in England with Coquelles Pas de Calais in northern France. The tunnel extends beneath the English Channel at the Strait of Dover. The tunnel is the only fixed link which connect the island of Britain with the European mainland. The tunnel connects the city of London by train to Paris, Lille, Brussels, Amsterdam and Cologne through Eurostar and Thalys train lines. The Channel tunnel is composed of three tunnels: two for rail traffic and a central tunnel for services and security. Passengers can travel either by ordinary rail coach or by their own motor vehicles which are loaded on special railcars. The project was financed by a consortium of British and French corporations along with banks. The operating company of the tunnel is called Eurotunnel. Approximately 2.5 million Eurostar passengers travelled through the channel tunnel in year 2020. The project was considered the most expensive construction project ever proposed in UK. By the completion time, the cost for the project reached GBP 9.5 billion. The channel tunnel project was designed as a concessional public private partnership. The project was structured as Design, build, finance, maintain, operate and transfer (DBFMOT) model. The problems for the project was manifold. The project couldn’t attract business on account of high access charges. The interest payment burden on the debt of £6 billion was very high. Low volume of passenger and rail traffic than estimated added to the problem.

Suggested Citation

  • B Rajesh Kumar, 2022. "Case 13: Channel Tunnel UK," Management for Professionals, in: Project Finance, chapter 17, pages 163-170, Springer.
    • Handle: RePEc:spr:mgmchp:978-3-030-96725-3_17
    DOI: 10.1007/978-3-030-96725-3_17
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