MAYOR of London Ken Livingstone announced on June 19 that 50:50 joint venture MTR Laing had been selected to operate a 107 km network of inner suburban lines under a contract to be signed on July 2. The contract will last for seven years from November 11 2007, with an extension of two years if performance targets are met.

MTR operates the Mass Transit Railway in Hong Kong, and has been seeking opportunities to exploit its reputation of efficient operation in Europe the London contract is its first success. The other partner, construction group John Laing, won the Chiltern Railways franchise in 1996 covering services into the London Marylebone terminus, and currently holds one of only two 20 year franchises in the UK.

The network covered by the new contract, to be known as London Overground because it will complement the Underground, which is also managed by Transport for London under the Mayor's control, has two elements.

Already in operation are four mainly orbital services currently known as Silverlink Metro, part of a franchise held by National Express Group. They are Richmond - Stratford, Gospel Oak - Barking, Willesden Junction - Clapham Junction and Euston - Watford locals. They will be known collectively as the North London Railway and use track owned and maintained by Network Rail.

The second service group, still under construction for completion at £1bn in 2010, will be known as the East London Railway. The core will be the Underground's East London Line, extended at both ends over Network Rail infrastructure.

Many existing inner London stations are run down, and MTR Laing is expected to bring them up to Underground standards with staff on duty during traffic hours. The Mayor intends to extend the Overground by taking over other routes in due course.

TfL has ordered 24 dual-voltage three-car EMUs from Bombardier to replace all the 1970s Silverlink Metro trains from 2009, and 20 four-car 750 V DC EMUs for East London services at a total cost of £223m. New DMUs will be purchased for Gospel Oak - Barking, which is not electrified.