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July 23, 2009, 5:33 a.m. EDT

U.K. Plans £1.1 Billion Rail Upgrade

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By Nicholas Winning

LONDON -- The U.K. government plans a £1.1 billion ($1.81 billion) plan to electrify two rail routes, which it says will improve passenger journeys, cut carbon emissions and boost the recession-hit economy.

Work will start immediately on the electrification of the lines between London and the Welsh city of Swansea, and between the northern English cities of Liverpool and Manchester, the government said. The Liverpool-Manchester stretch will be ready within four years while the London to Swansea route will be completed within eight years.

"To build a better Britain, we must be bold, innovative and forward-looking and invest with confidence in our country's transport infrastructure, jobs and industry," Prime Minister Gordon Brown said in a statement.

The works represent the first big electrification of the rail network since the 1980s and will increase the proportion of electric rail journeys in the U.K. to 67% from 60%, the government said.

The program will pay for itself over the long term through lower train leasing, maintenance and operating costs, it said. The short-term cost of U.K. rail infrastructure operator Network Rail's financing will be met by the government with no impact on the group's other plans in the five-year investment period to 2014.

The work will be good news for specialist rail contractors, such as Balfour Beatty /zigman2/quotes/202863772/delayed UK:BBY +0.27% PLC, Germany's Siemens /zigman2/quotes/200873563/delayed DE:SIE -1.56% AG and France's Colas /zigman2/quotes/207306815/delayed FR:RE -2.29% SA.

The government said the new investment will also help stimulate further intercity and regional transport improvements, including allowing electric trains to run from Manchester to Glasgow and Edinburgh in Scotland. It will also open the option of extending the planned London Crossrail route to Reading.

There were 21 million passenger journeys on the London to Swansea line in the financial year to April and more than one million on the Liverpool to Manchester railway.

Write to Nicholas Winning at nick.winning@dowjones.com

/zigman2/quotes/202863772/delayed
UK : U.K.: London
222.80 p
+0.60 +0.27%
Volume: 859,272
Sept. 25, 2020 4:35p
P/E Ratio
14.76
Dividend Yield
0.94%
Market Cap
£1.54 billion
Rev. per Employee
N/A
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/zigman2/quotes/200873563/delayed
DE : Germany: Frankfurt
112.50
-1.78 -1.56%
Volume: 15,545
Sept. 25, 2020 8:58p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
€219,884
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/zigman2/quotes/207306815/delayed
FR : France: Euronext Paris
106.50
-2.50 -2.29%
Volume: 660.00
Sept. 25, 2020 5:35p
P/E Ratio
51.11
Dividend Yield
6.01%
Market Cap
€3.48 billion
Rev. per Employee
N/A
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