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Metronet looks set to face a hefty bill for the cost of over-runs on its public private partnership (PPP) agreements with London Underground.

Guidance issued this morning by the PPP arbiter Chris Bolt suggests the consortium would be liable should he be asked to conduct an extraordinary review of seven investments, including upgrade work on the Victoria Line, submitted by Metronet as a sample.

His statement follows representations from the consortium and London Underground (LU) seeking clarity on the likely outcome of a review of cost over-runs totalling around £750 million.

Under the terms of the agreement, Metronet is entitled to seek additional funding from LU for over-runs if the work is carried out "in an overall efficient and economic manner and in accordance with good industry practice".

Mr Bolt said in his statement: "While it seems clear that Metronet will need to undertake much of the work covered by the seven identified investments, the evidence leads me to conclude that the projected costs are not fully efficient and economic.

"This is consistent with the view I reached last year that Metronet has not carried out its activities since the start of its PPP agreements in an overall efficient and economic manner and in accordance with good industry practice."

Despite this announcement, Metronet remained upbeat, saying that it would seek to reach a deal with LU.

"Our sample reference items purposefully covered a range of issues," explained Metronet's chief executive, Andrew Lezala. "We anticipated that some references would be deemed more economic and efficient than others."

He added: "This means that to the extent the costs have been incurred economically and efficiently, Metronet should be reimbursed, either through a commercial deal, or through an extraordinary review process."

Metronet is owned by Atkins, Balfour Beatty, Bombardier, EDF Energy and Thames Water.

The consortium is responsible for two thirds of the Tube network and is LU's biggest PPP partner.