The potential cost of a major upgrade of Derry's rail service has jumped from £20m to £40m, it was revealed today.

The second phase of the Coleraine to Derry rail project was originally estimated at £20m to £22m, but has risen to an estimated £40m.

The work would install new signalling and create a passing loop for trains.

Regional Development Minister Danny Kennedy told the Assembly today that Translink had used figures that were 'not based on fact'.

The minister outlined the findings of a review into Translink's handling of the project.

"Translink has had custodianship of a key Programme for Government commitment and has singularly failed to discharge it effectively," he said.

The work will now have to go out for retendering.

The SDLP's John Dallatt described the latest setback as "devastating".

"This is another slap in the face for the north west which has suffered so many setbacks in the development of road and rail transport infrastructure," he said.

"This announcement is particularly frustrating that it is the second time this contract has been botched by Translink who are clearly not fit to lead a proposal to develop the infrastructure for an intercity rail service.

"The minister needs to seriously consider if Translink has the expertise or the commitment to be handling tendering processes of this nature."

A spokesperson for Into The West, a lobby group which has demanded more investment in the Derry rail service, said the huge rise in the proposed cost of the work showed that the original figure was 'pure guesswork'.

"This is a measure of Translink’s casual lack of commitment to the Derry line," the spokesperson said.

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