Britain sells Channel Tunnel rail link to Canadian group

Transport Secretary Philip Hammond said the price for Britain's first high-speed line exceeded expectations and would be a "welcome contribution" to the government's aim of paying off the budget deficit by 2015.

The 30-year concession has been sold to a consortium comprising Borealis Infrastructure -- an investment arm of Canadian pension fund OMERS -- and the Ontario Teachers’ Pension Plan, the transport ministry said.

"This is great news for taxpayers and rail passengers alike. It is a big vote of confidence in UK plc and a big vote of market confidence in the future of high speed rail," Hammond said.

The 68-mile (109-kilometre) line links the British capital to the tunnel underneath the English Channel and is used by Eurostar trains heading to and from Paris and Brussels.

Domestic lines also operate on the route, which includes stations such as St Pancras International, Stratford -- where the London Olympic Games will be held in 2012 -- and Ashford in Kent.

The government announced its plan to sell off the rail link in June as part of a programme of asset sales to raise much-needed public funds.

Hammond said the price "exceeds the highest expectations for the sale and will make a welcome contribution to reducing the deficit". Previous estimates had put the cost of the concession at about 1.5 billion pounds.

Prime Minister David Cameron has made a priority of paying off the 155-billion-pound deficit inherited by his Conservative-Liberal Democrat coalition government when it took office in May.

However, the head of the RMT railways union, Bob Crow, deplored the sale, saying: "This announcement is just another act of political vandalism on the UK railways.

"The most modern section of the UK rail network has been sold off for a song in what amounts to nothing more than a fire sale of the family silver to prop up the financial deficit caused by the bankers and speculators in the first place."

An offer from Eurotunnel -- which operates the Channel Tunnel -- and Goldman Sachs had been viewed by many as the favourite for the bid.

But a Eurotunnel spokeswoman welcomed Friday's announcement, saying it was "good news" because the Canadians would aim for increased traffic, and that would benefit the Channel Tunnel.

"We're in a situation where even if we didn't win the bid, it is still favourable to Eurotunnel," she told AFP in Paris.

Other bidders were thought to include a consortium of British investment fund 3i, Morgan Stanley and the Abu Dhabi Investment Authority, and a grouping of German insurance firm Allianz and the pension fund of Britain's BT Group.

The Canadian consortium already invests widely in Britain's infrastructure.

Borealis invests in Associated British Ports, which owns and operates 21 ports, while the Ontario Teachers' Pension Plan, the largest single-profession pension plan in Canada, has stakes in Bristol and Birmingham airports.