Chinese on track for HS2 train bid, UK rivals in crisis

Chinese railway companies are on course to win bids to operate High Speed 2 trains in the United Kingdom because of the chaos among rival British bidders.

London-based The Times newspaper reported that State-invested Chinese operator Guangshen Railway Co Ltd and MTR Corp Ltd, which runs Hong Kong's rail network, are favorites to take the contract to run the 354-kilometer-per-hour trains, from a shortlist of three.

The shortlist includes two British-led entries－one from a consortium involving Virgin Rail Group and another led by FirstGroup Plc.

HS2 is a high-speed railway project in the UK that will directly link London, Birmingham, the East Midlands, Leeds and Manchester.

First Group's CEO resigned last month after reported losses of 326 million pounds ($428 million). Virgin Trains recently handed back control of the East Coast main line to the government after overbidding for the rail franchise.

Final bids for the new West Coast Partnership that will design and run the HS2 services are due early next month. The contract is to take over the running of the West Coast main line franchise from London Euston into the late 2020s.

The report suggests bidders are worried about the amount of capital they would be expected to put up in bonds to run HS2, while it is unclear how popular the line will be.

The government also wants the final salary pension scheme for employees on the West Coast main line to revert to the winner of the bid.

These liabilities might be difficult to bear for companies such as Stagecoach Group, which is part of the Virgin consortium, and FirstGroup, according to the newspaper.

Faced with delays and industrial action on UK trains, the source told The Times, "The government cannot afford to stuff this up."

"Unfortunately, they appear to be tendering a contract that is proving far from easy to bid for," the source said.

Britain's Transport Secretary Chris Grayling is due to make a final decision next May.

Julian Beer, deputy vice-chancellor at Birmingham City University, said if a Chinese company does win the contract, "it is up to the British government and British firms to make sure they feature in the supply chain and associated activities to at least gain some benefits".