Colombo: Sri Lanka's railway said it is seeking US$200mil from a foreign investor to replace decades-old coaches and tracks, and to buy faster engines to help the 139-year-old company post its first profit since 1943.
The state-owned railway was transformed last month into the semi-independent Sri Lanka Railway Authority – a first step to free it of state control – amid union protests. The government appointed RITES Ltd, a unit of Indian Railways, to recommend ways to make it profitable.
“Sri Lanka Railway needs US$200mil over the next three years, something the government is unable to invest at present,'' Cecil Amerasinghe, the top civil servant in the transport ministry, said in an interview here.
Sri Lanka wants to accelerate asset sales after a cease-fire halted the island's 20-year Tamil separatist war, which has discouraged foreign investment. In April, the government sold 90% of Sri Lanka Insurance Corp to a group of investors.
Finding someone willing to put money in the railway may be tougher.
The operator has not made a profit since 1943, has 17,000 employees, and a vocal trade union opposed to its sale.
“The railway has real estate, rolling stocks and hundreds of kilometres of track, but it has been running at a massive loss,'' Peter Harrold, country director for the World Bank, said here.
“It only covers 10% of its running costs through sales. In any valuation on a net basis, you'd have to pay someone to take it off your hands,'' he added.
Sri Lanka Railway was built in 1864 by British colonial rulers to transport tea, coffee, rubber, cinnamon and other spices from upland country to Colombo for export. It moves 300,000 passengers daily on 324 trains between 320 stations across the island, which has a population of 19 million.
In recent years, the railway has lost market share to road transport as an absence of investment has diminished its speed and reliability. Its share of passengers carried by public transport has fallen to 6% from 9% ten years ago.
Train fares were last raised seven years ago. Since then, diesel, electricity and water prices have risen two-and-a-half times, salaries have doubled and telephone tariffs have increased seven times, according to Sri lanka Railway general manager Priyal De Silva. – Bloomberg
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