This article was published in the Island newspaper some years ago; as a result, some of the figures quoted in this article have changed during the intermediate period. Nevertheless, we republish this article since the content is still valid today as the day it was published.
The Railway is over 130 years old and when it started operations in 1864, the fare per mile was 6 pence. Today it charges its passengers only 25 cents per mile. If the same fare as in 1864 was charged in today’s Rupees it would be Rs. 10 per mile. What a colossal subsidy the passengers are receiving. Who pays for it? All those who are taxpayers that includes everybody except those who benefit from travelling in the railway.
The Chinese have a saying, “cheap no good, good no cheap”. A good service cannot be provided cheaply. The Railway is unable to provide a better service because like the government it is cash strapped. Last year it incurred a loss of Rs. 1875 million, charging 25 cents per kilometre. It spends over one Rupee per mile to run its services. Train fares were last increased in 1996 and have been frozen since then.
But since then the price of diesel has gone up from Rs. 12.80 per litre to Rs. 30 per litre. The Railway consumes about 30 million litres per year to run its services and has to fork out an extra Rs. 2275 million to the Petroleum Corporation. The wages bill has doubled and now is about Rs. 750 million.
Compare the revenue per passenger mile, which has been frozen since 1996, with the comparable bus fares for the same distance. The bus fare from Colombo to Pannipitiya is Rs. 12 while the train fare is only Rs. 4.50. The Railway also maintains an outmoded system of concessional season tickets for a whole month at very low fares, to make matters worse. Government employees who buy them pay only .03 cents per km. Other commuters from the non-government sector also have season tickets on which they pay 08 cents per km. What economic logic is this?
Who has to decide on train fares? It is the Minister with the approval of the Minister of Finance. Ministers don’t like to raise prices and fares. So the public taxpayer is subsidising the train traveller, a public that consists of 25% below the poverty line. The GST or VAT that every one is paying goes to subsidise the train traveller among other things. Some say those who travel by train cannot afford to pay higher fares. If so they will make alternative arrangements like looking for employment closer to their homes or seeking transfers to government agencies closer to their residence.
Form of organisation unsuitable for a public transport enterprise
The Railway is the Ceylon Government Railway and it is run like any government department although everybody knows that an activity like running a transport service is best run as a government corporation rather than as a department. It has to pay its gross revenue to the Treasury and obtain the funds it needs for running the railway from allocations made by the Treasury. It has to follow the long drawn out and tortuous Public Service Commission procedures in matters of promotion and discipline of its 16, 000 staff. All this means the persons in charge do not have the flexibility required to run a large service enterprise like the Railway. It is overstaffed like every other public service agency as a result of successive Ministers treating it as recruiting ground for their party supporters. While the CGR has 16 employees per mile of track, Malaysia has only 4 employees for the same.
How safe are the trains?
This depends on adequate and timely maintenance of the track, proper signalling etc. Track maintenance requires ballast to be replaced when worn out. These are the stones placed under the sleepers or in the surrounding areas of the track, over which the train runs. They are ground to pieces and powder with trains continually running over them due to vibration and so on. They have to be replaced every 6 years. The replacement programme for ballast has fallen behind schedule owing to shortage of funds. About 1000 cubes of metal are required per mile and the Railway can afford to buy only 30,000 cubes per year whereas the requirement is three to four times this figure.
Rails have to be replaced too as they wear out. The life span of the rails varies from 4 to 25 years, depending on whether it is on the coastline or inland. The life of the rails on the coastlines is low because of constant exposure to the sea breeze, which corrodes them. Rails have to be imported and cost much money. They were imported last year and cost Rs. 660 million. The Railway has still not settled the liability to the bank under the Letter of Credit and it is paying Rs. 150 million as interest thereon. The cost of the rails is capital expenditure, which should be reimbursed by the Treasury. But instead of reimbursing it the Treasury has charged the interest to the annual Capital Expenditure grant. This sort of situation would not arise if the Railway had charged depreciation and a Depreciation Reserve built up. But such accounting is not followed in government departments, another inadequacy in the present form of organisation as a government department.
Sleepers are another item required for the maintenance of tracks. 150,000 sleepers are required each year and the cost of each sleeper is Rs. 3000. The sleepers are bought from the State Timber Corporation to which the Railway already owes Rs. 450 million. Concrete sleepers are used in some tracks for which they are suitable. The Railway in association with the State Engineering Corporation makes them. A large stock of such sleepers, worth over Rs. 150,000 is available with the Railway but it is unable to use them for want of fasteners, which have to be imported, and the Railway has no money to import them. The Treasury doesn’t seem to lack funds to provide for the travel abroad of so many Ministers but there is no money to provide for the essential safety of travel of the public and for the utilisation of the concrete sleepers which have already been made and lying around. What irresponsibility to allow such concrete sleepers to waste. Does nobody care?
How punctual are the trains?
It used to be the boast of Mussolini that he made the Italian trains to run on time, something that had not been possible before, given the undisciplined nature of the Italian rail workers. The CGR has improved on its punctuality and 85% of the daily trains run on time.
What can the railway do to reduce the delays and ease the over-crowding in trains? The Railway acquired 10 locomotives, the controversial French locomotives tender where the President over-ruled the Tender Board. Six of these are in the Workshop undergoing repairs. But the Railway is not in immediate need of locomotives. The Railway runs 325 trains each day. Over-crowding can be reduced of more carriages are added. Carriages used to be made in the Railway Workshop at Ratmalana and they were very good ones too. The Queen herself commended a special carriage made to transport Her Majesty during her visit in 1952. But gone are those days. Now the Railway has no money to make carriages.
The Railway is now running 190 carriages, which are not quite roadworthy, or rail worthy. They should go into the workshops by now for repairs. The life of a carriage is 20 years and 400 carriages are over 20 years. 600 carriages are needed to replace them. But where is the money to come from? Carriages were last purchased in 1992. If you want a safe and regular train service without overcrowding, 50 carriages must be bought every month to replace those whose life has expired. Each carriage costs Rs. 25 million. The politicians are not interested in such activities like local manufacture utilising idle equipment and men. There is much that the Railway can do to reduce delay and over-crowding in trains. Double tracking on the southern coastal line is being carried out and completed up to Wadduwa and the Maradana to Ragama double track is finished. So is the track from Polgahawela to Rambukkana.
Hundred Day Programme
The Minister in charge of the Railway participated in the UNF Government’s 100-day programme. The Memorandum of Understanding with the LTTE required the railway line to be restored. So the Railway restored the track in the Batticaloa line and extended it from Welikande to Valaichenai, a distance of 32 kilometres, costing Rs. 160 million. It used the money from its maintenance budget. This was one of the more substantial and concrete projects in the 100-day programme. But the Railway has still not been reimbursed the capital expenditure incurred. It’s like robbing Peter to pay Paul, sacrificing maintenance for building new tracks, hardly a prudent thing to do. The Railway has also introduced an extra train to Vavuniya. These trains are packed but they add only to the losses of the Railway. Sometime in the near future it will be necessary to restore the railway lines to Jaffna and Talaimannar. Such train facilities between the north and south will do more to strengthen relations between the peoples of the north and the south than any number of peace parades. But the cost of investment will be Rs. 5000 million for Jaffna line. It should be possible to obtain funds from Foreign Aid under the Triple R project (Relief, Rehabilitation and Reconstruction).
Can the Railway reduce the traffic congestion on the city’s roads?
Several people have made suggestions to extend he railway lines and to put more trains to divert some part of the traffic now utilising the buses on the roads. The Railway now carries about 125,000 passengers each day to and from Colombo, and 39 Diesel Multiple Power Cars, are used. In 1960, the Railway transported 50,000 passengers using 45 such units. So if you are forced to travel on the roof or footboard perched on to the doors, don’t blame the Railway. Blame yourself since you don’t want to pay more by way of fares or that is what your representatives in Parliament think. To reduce over-crowding more carriages have to be introduced. The Railway Workshop at Ratmalana can make them. But where is the money to buy the materials? There is no doubt that the solution to the problem of traffic congestion on the roads is to utilise the railways more. But this requires more money to be pumped into the Railway. But it is not enough to pump money. There must be organisational changes and the Railway must be given the freedom to operate with flexibility. The organisation should take the form of a public corporation or government owned business undertaking, with it own share capital. Fares will have to be increased and if the commuters want a better and a safer service they will have to pay more.
The Future of the Railway
Does the government want to run down the service of the Railway? People want higher speeds and punctuality and to provide them the CGR needs to invest a lot of money. But to starve the Railway of funds for maintenance is pennywise and pound-foolish. When tracks and rolling stock are not maintained properly, their economic life is reduced and re-investment has to be brought forward in time to keep the service going.
The Minister now in charge is a competent professional and not a mere politician knowing only politics as his predecessors. The government needs to keep the Railway under him if it is interested in the welfare of the commuters. If slots have to be found for other politicians let them be appointed as Project Ministers or better still as Ministers without Portfolios. They will do less damage to the institutions and the economy. But the Minister of Finance and the Secretary should look into the funding of the Railway without depending on the Treasury officials.
The Minister of Transport has now appointed a Committee to investigate and report on what ails the railway. The first requirement for economic efficiency of an enterprise is to set the price of the output, in this case the train fares, to recover the cost of inputs. If the railway is to become a going concern the train fares must be raised as they are far too low. Along with a fare increase must go better service. This requires investment and re-investment of funds earned by the enterprise. Since the Railway has not been allowed to recover its cost of operation there are no Reserves for such investment and hence the funds must come from the Treasury. A safe and comfortable service is what the commuters want and they will pay up higher fares if such a service is provided. Railway workers who belong to the aristocracy of workers will have to be disciplined since they seem to engage in restrictive practices. The unions are not democratic organisations and they do not promote the interests of the train travellers. Their members receive wages privileges and perks that bear no relation to productivity. They are a major stumbling block for reform that would benefit the train travelling public. Much political courage will be needed to carry out reform.
Source: The Island
Tags: bus fare, bus fares, commuters, economic logic, government employees, government sector, kilometre, low fares, petroleum corporation, poverty line, rupees, season tickets, train fare, train fares