Sri Lanka railway says needs higher fares
May 02, 2009 (LBO) – Sri Lanka’s state-run railway needs to charge higher fares and compete with road transport on a level playing field in order to avoid losses, its general manager Lalithasiri Gunaruwan said.
He said he was trying to turnaround Sri Lanka Railways through changes in fares and better management. The department has recommended a fare hike but it depends on government policy, he said.
Gunaruwan said the rate per passenger kilometre charged by the railway was less than that charged by the private and public bus services. “It means we’re transporting people at a much lower fare than buses,” Gunaruwan told LBO in an interview at the opening of a workshop to repair goods wagons.
He also noted that bus operators do not have to pay for the maintenance of transport infrastructure such as roads, bridges, and signals which cost is borne by different government departments. “For buses, the use of infrastructure is free of charge,” Gunaruwan said.
“But the railway, despite its fares being one-fourth of bus fares, has to maintain our own tracks, bridges, tunnels, signals – the economics are different.”
He said critics who consider the loss-making railway service a burden on the government treasury did consider these aspects of the service’s cost structure.
“So it is not fair to say the railway is a burden on the budget,” Gunaruwan said. “The railway also has other social benefits to society.”
While state railways lost 4.5 billion rupees in 2008, the state bus services, despite getting roads free, also lost 3.5 billion rupees. Both institutions are heavily over-staffed.
Private bus operators, who also wield political power – while not getting handouts – have lobbied and got tax benefits.
But analysts say roads are shared by different types of vehicles who more than pay their way, and are not a burden on anyone else.
Fuel used by road vehicles is heavily taxed.
The price of a litre of refined petrol in the Singapore wholesale market is now only 39 rupees a litre and freight is less than two rupees a litre. But petrol is retailed at 120 rupees a litre.
Diesel which is used by rail and bus operators are taxed less. Refined diesel costs only 41 rupees but is retailed at 70 rupees.
Imported road vehicles are also heavily taxed and are a major source of government revenue. Last year tax revenues fell largely because tax-slashed cars were given to state workers.
In 2006 for example, the country’s road development authority was given just over 24 billion rupees, while a single tax component on vehicle imports – special excise duty – brought in 20 billion rupees.
Analysts say that road users pay through their nose to the government enough taxes to sustain not only road building but other government expenses, while train users seem to get a free ride from taxes paid by non-users.
The government itself has gone on record saying they cannot cut the petrol tax because money is needed for the war and other purposes.
Source: LBO
Tags: fares
