Network Rail is to raise £10 billion from capital markets in its own right from 2009, after years of using a government guarantee to raise cheap loans.

The rail infrastructure group, which unveiled a 20 per cent increase in profits yesterday, will use its latest financial results to convince credit rating agencies to give it a top investment-grade rating. The move will mean that the rail infrastructure group can finally begin to reduce its dependence on the Government, although a large proportion of its income will continue to come through subsidies.

The new debt raising will increase Network Rail's borrowings to about £31billion by 2014. The company plans to tap the markets for £2billion a year, in the five years from 2009 to 2014.

Network Rail said yesterday that its profits had increased by 20 per cent to £1.2billion. Almost two thirds of this rise in profits comes from increased track access charges to train operating companies, who pass them on to passengers in the form of fare increases. The remaining improvement in profits was driven by financial efficiencies and will be reinvested in the railway.

The rail infrastructure group, which has no shareholders and is described as a not-for-dividend company, will approach the main credit rating agencies in the autumn when it has received a final decision on its funding for the next five years from the Office of Rail Regulation (ORR).

Network Rail is in negotiation with the ORR over its funding for the next five years. On Thursday, the ORR proposed cutting Network Rail's funding for the next five years from the £29.2billion that the rail group has asked for to £26.5 billion.

A spokesman for Network Rail said that it was important for the company to demonstrate financial strength, so that it could raise money in its own right. “Now we can raise debt like any normal company,” he said.

The ORR is encouraging Network Rail to become financially independent by proposing that it pays a charge to the Government, of £880million, that reflects the value of its cheaper debt, obtained by using a Government guarantee. Network Rail's debt is currently counted as part of the Government's deficit, after a high-profile row with the Office for National Statistics five years ago.

Over the next five years Network Rail will receive £16.4 billion of government grants, with most of the rest coming from £6.2billion of track access charges paid by train operators.

Revealing its profits yesterday, the group also claimed that it had made a breakthrough on punctuality, with more than 90 per cent of trains arriving on time in the month of April, for the first time since records began. In the year to March 31, 89.9 per cent of trains arrived on time.

However, Network Rail failed to achieve its target for reducing delays directly attributable to infrastructure problems last year. The disruption caused by engineering overruns at Christmas and Easter has also taken its toll on the group's financial efficiency targets, after the ORR slapped a £14million fine on the group.

Ian McAllister, the chairman, said: “Train performance is at an all time high, a £4billion investment programme has been delivered, delays caused by the infrastructure have been cut and costs have also been reduced. In additon, lessons have been learnt after the engineering overruns at New Year. Changes have been made to make the planning and execution of such big improvement schemes more robust.”

Run along special lines

— Network Rail was formed as a not-for-dividend company in 2002 to take over ownership of the tracks, stations and infrastructure, previously owned by Railtrack

— Network Rail has no shareholders but is run in a similar way to a public company. It has more than 100 members, drawn from unions, industry groups and train operators, whose job it is to scrutinise the board's decisions

— The group's main funding comes directly from the Government and is negotiated every five years through the independent Office of Rail Regulation. The ORR is proposing that Network Rail will have £26.5 billion funding from 2009 to 2014

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