LONDON -- Construction cost increases have hiked the price of building a high-speed rail link between Britain and France under the English Channel by 40 percent to $11.2 billion, officials said Monday.
The originial estimate for the private-sector Channel Tunnel project was set at approximately $7.8 billion in 1987, according to Eurotunnel, an Anglo-French consortium.
The group said higher construction and equipment costs have forced it to seek additional funding in recent months.
Eurotunnel's Joint Board met Sunday in Paris to review progress, but were unable to reach an agreement with contractor Transmanche-Link on how to handle cost increases.
'Consequently, it has not been possible to determine with Eurotunnel's Syndicate of Banks an acceptable forecast of costs to complete the project which can be used as a basis for arranging the necessary additional funding,' Eurotunnel said in a joint announcement to the London and Paris Stock Exchanges.
Following the news, Eurotunnel share prices plunged $160 to $952 on London's International Stock Exchange Monday morning. The project, nicknamed the Chunnel, is the largest construction plan in Europe and is expected to open in June 1993.
The proposed series of rail tunnels, including one burrowing underneath the English Channel, has been criticized by environmentalists and residents who say it will create noise and damage the countryside.
Eurotunnel Co-Chairmen Andre Benard and Alastair Morton said in a statement that talks between Eurotunnel, TML, its shareholders and its banks are continuing in an effort to resolve the differences.
