Infracos become vested
LUL and each Infraco have now become separate legal entities following vesting, which went into effect on 1 April. This means that each Infraco is incorporated and now trades as a separate company to deliver specified services to LUL.
David Crawley, Managing Director of Infraco BCV Limited, explains: “We are now working as separate entities with LUL as the shareholder and customer. Staff are now directly employed by their Infracos. The relationship with one's shareholder is quite different to the relationship with one's former employer."
The difference is an important one to understand because it involves a shift in focus. Now that LUL is the customer and shareholder, staff within the Infracos have a new business relationship with LUL, with the sole task of delivering the services laid out in the PPP contract.
“Individuals must change their focus of work from having a network perspective to concentrating on work within their individual Infracos," says David. “In the future, LUL will integrate the work of the three Infracos."
However, the Infracos and LUL are still in a transitional phase of preparation for private ownership.
“During this time, we have an additional arrangement in place called the Transition Agreement which sits above the PPP," says David. “This Agreement defines the ways in which we need to work towards achieving the PPP and will continue until transfer to the private sector."
He continues: “The Agreement allows us to work to and test the PPP contract. Although Infraco finances are still strongly linked to the finances of LUL, the legal separation makes it possible to operate more realistically with regard to the performance and reward systems in the contract.
“We have one year to operate to our fullest capacity," he adds. “In this time, the Infracos need to develop a track record of performance as well as identify and define necessary improvements to the PPP contract before the final change of ownership."
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