Terms agreed by the French and British governments on December 19 for extending Eurotunnel’s concession by 34 years include a substantial reduction in the cost of sending Anglo-German rail freight through the Channel Tunnel. This is the first time Eurotunnel has agreed to vary tariffs set out in the Railway Usage Contract agreed with SNCF and British Rail in 1987.

The governments will receive 40% of profits from the Channel Tunnel from 2052 to 2086. Agreement could have been reached much earlier had Britain’s Deputy Prime Minister John Prescott not demanded acceptance by Eurotunnel and SNCF of specific measures to boost rail freight. This reached 2·9 million tonnes last year, barely 40% of the figure forecast for 1997 when the RUC was signed a decade earlier.

Assurances have been given by Eurotunnel to existing operators - SNCF and Railfreight Distribution (now owned by English Welsh & Scottish Railway) - regarding charges to be levied after the RUC expires in 2006, but Prescott failed to secure guarantees of open access through France. However, under pressure from government, Réseau Ferré de France has signed an undertaking to facilitate the creation of Trans-European Freight Freeways from Britain to Metz, Strasbourg and Lyon, and eventually to Italy and Spain.

The big prize was always Germany, Britain’s biggest trading partner in the EU. It is scandalous that not one of some 160 trains scheduled weekly through the Tunnel enters that country because DB deliberately distorts tariffs to favour German ports. The existence of this policy was confirmed late last year when the Court of First Instance upheld a fine of ECU11m imposed by the European Commission because DB inflates tariffs for containers using Dutch and Belgian ports.

Eurotunnel will now offer special low rates for new traffic provided it is destined for or originates within Germany. Freight which merely transits Germany, or is reconsigned within that country, will continue to be charged at the RUC tariff.

For the time being, Eurotunnel will continue to invoice British Rail and SNCF for the Minimum Usage Charge as laid down by the RUC, and will not receive extra revenue from new German traffic in the short term. However, the hope is that substantial additional tonnage will be attracted, advancing the date at which Eurotunnel’s total rail freight charges break through the MUC ceiling, thus generating more revenue than the company could otherwise have expected to receive.

  • Eurotunnel has settled all outstanding claims and disputes with Transmanche-Link, the consortium which built and equipped the Channel Tunnel. TML will pay Eurotunnel £40m and maintain its 10 year warranty covering the Tunnel infrastructure, but Eurotunnel has assumed responsibility for all TML’s subcontracts relating to rolling stock. o