ICL Plc, the European services arm of Fujitsu Computers, has denied reports that it is on the verge of losing a $1.6bn project to modernize the UK Post Office and Benefits system. ICL was originally appointed in 1996 to be the lead contractor of the Pathway consortium, which was supposed to deliver an automated Post Office counter service system by 1998. However, since then, the Pathway partners De La Rue and Girobank have left the group, and the project is said to be two years behind schedule. It is now the subject of an ongoing review by the UK Treasury which, according to reports in London’s Financial Times, could scrap the project at any moment.
An ICL spokesperson said that there is little prospect that the project will be abandoned. The company is expecting an imminent and positive conclusion to the review the spokesperson said, adding that the contract isn’t overdue. ICL Pathway is on track. In fact, of the UK’s 19,000 Post Offices, only 200 have so far been equipped with the new automated counter system. If ICL meets its current timetable, and commences automating 300 Post Offices per week from August this year, the project will not be finished until March 2001.
So far ICL has sunk an estimated $3.2m in the project, which is a UK government private finance initiative scheme under which ICL has agreed to finance the roll-out of the project, in exchange for a small percentage of the value of all transactions that ultimately pass through the system. If ICL were to be removed from the project, there is little prospect of it seeing a return on its investment. This could turn out to be a major blow to the company’s revenue in the run up to an expected float on the London Stock Exchange next year.
