Highlands and Islands Enterprise (HIE) today announced that the final cost of the Cairngorm funicular railway project was £19.587 million.

This compares with the original 1996-97 estimate of £14.8 million - an increase of 32 per cent.

This increase is attributable to the project's overall construction cost escalation, which largely arose from higher than anticipated engineering costs on the railway support columns and tunnel, together with the associated professional fees.

The final cost of £19.587 has been met in part by a European Regional Development Fund (ERDF) grant of £2.699 million.

The remainder of the cost, £16.888 million, has been met by HIE.

This final figure was reached some months ago at the conclusion of negotiations between HIE and the project's contractors. The Scottish Executive was kept fully informed of these negotiations. HIE's final settlement with the contractors was agreed by the HIE board in the course of the current financial year. Details will be included in HIE's accounts for the current year which will be submitted to Executive ministers and published in October.

At the project's outset it was intended that, while HIE would take ownership of the funicular railway itself, the funicular's operators, CairnGorm Mountain Ltd, would take ownership of associated buildings - principally the funicular's two terminals and the facilities they contain. In 2001, however, HIE decided to take full ownership of the entire funicular complex - including all associated buildings. Consent, as announced publicly at the time, was given in August 2001 by the Scottish Executive to incur costs of £3.5m for this purpose. This is included within the total HIE expenditure of £16.888 million.