The political will to find a way

Railway, then and now:

by Priyal de Silva

Rail services in Sri Lanka were commenced by British in 1864 with the inauguration of the first train to Ambepussa. Thereafter Railway tracks were extended to Kandy and to the central hills mainly to transport tea and other agricultural produce for export to the Port of Colombo, on which the country's entire economy depended on.

Although in early stages the Railways catered mainly for freight, and with gradual establishment of townships and the necessity to develop other principal towns, the Railway soon catered for passenger operations as well.

From the commencement of the Railways, it was managed by the Government as a service oriented organisation. However since operational costs were relatively low, Railway was able to make a reasonable profit on the operations up to World War II.

Things changed very unfavourably for the railway in the post war era, with the expansion of the road network and the operations cost ever rising, the Railway's share both in the freight and the passenger started to decline. Yet then, the services offered by the Railway were commendable as it was financed by the Government.

The increase in price of oil in 1975 and there after, by the OPEC countries, aggravated the problem further with the burden on the Treasury rising by manifold. Along with the gradual increase in the population the Treasury was unable to shoulder this burden, as it was duty bound to develop other infrastructure as well, such as health, education, roads, water supply, sanitation and electricity for the well-being of the masses.

Hence the limited resources being proportionately distributed to these sectors as well, the funding received by the Railway was found inadequate when comparing against the increase in world market prices of enormous materials and spares that have to be imported periodically to sustain the service.

The problem was further aggravated due to the purchasing power reducing due to the weakening parity rates. The Treasury was unable to provide the total allocation required by the Railway. This resulted in the deterioration of the rail services gradually and public complaints being voiced from 1980 onwards.

Needless to say that during the July 1980 strike where Railway lost a major portion of its skilled resources triggered the problem further.

After 1983 due to the security situation the rail services have to be curtailed on the Northern line up to Vavuniya, and the line to Talaimannar Pier had to be totally closed down thus incurring a heavy loss of revenue, in addition to losing locomotives and carriages due to terrorist activity.

Private operators

From 1985 onwards the Government sought the assistance of many donor agencies to revive the services. The considered prescription by the donor agencies was privatisation and reduction of labour. Due to internal pressures of the trade unions the Government never opted to take this path.

However in order to obtain a higher revenue from the valuable assets such as property, so as to ease off even part of the financial burden, the Government was anxious to commercialise certain activities, but to find the Railway Ordinance becomes an obstacle in the process.

To overcome this hurdle the Government intended transforming the Railway Department to an Authority. The Authority bill was passed in Parliament in 1993 but was delayed in implementation due to pressure from the trade unions.

In the meantime Railway Management Council (RMC) was formed with General Manager as the chairman, sub departmental heads representing infrastructure, rolling stock, operations and commercial, along with a worker representative and with professionals competent in transport from the private sector to look into the affairs of the Railway and recommend ways and means of improving efficiency, quality of service and productivity of staff.

Although the RMC brought some good results with the objective of improving the services, still the Railway Ordinance was a hurdle when private sector participation was solicited.

This was considered necessary as the Treasury was unable to provide all the funds for investment, especially when funds were required for non fare box revenue projects.

Hence, finally the Authority bill was gazetted in 2003 for implementation of the Railway Authority, without any procedures being laid down for functioning of the organisation during the transition period.

The then management was not successful in coping with the many strikes and labour disputes that evolved as a result of this transformation. Then in 2005 the bill was revoked and once again the Railway functions as a Government Department.

In the case of a Railway in a developing country, where the per capita income is comparatively low, and of that also mainly the lower income groups only opt to travel by train, privatisation may not be the solution as the commuter may not be able to pay the actual cost of operation as the legitimate fare, in such an instance the Government will have to pay the difference to the private operator as a subsidy.

In many developed countries such as Britain private operators have failed, as they were compelled to close down uneconomical lines due to poor return on investment.

Private operators on the other hand are capable of realising revenues from property development but in such instances too they have to make heavy initial investments, and they will be concerned on the return on investment.

Unlike running a bus on a road constructed and maintained by the Government, a Railway operator has to construct and maintain the tracks, bridges, tunnels, stations, level crossings (for the benefit of the road user!), signalling and communication systems, in addition to locomotives and rolling stock and also has to operate same, which involves huge initial investments that need be recovered over a period of time. In contrast the Government has always maintained the train fares lower than the bus fares.

In Britain when private operators were running the service, there were accidents due to assets not being replaced periodically at the end of its lifespan. However when you break away from Government shackles, there is a possibility that labour output can be increased with a performance based remuneration system.

This will also facilitate in maintaining quality, cleanliness and standards. Hence an immediate solution would be for the Government to specify the requirement of the services and mutually agree with the management on the expenditure involved and allocate a subsidy which will be the difference between the expenditure and revenue.

This will force the management to keep the costs low, productivity high and thereby maximize revenue.

Land owners

Since the Railway is one of the biggest land owners, many are of the view that the Railway could earn a sizable income by developing these properties which could cross subsidize the losses due to low passenger revenues.

It should also be understood that the Railway's core business is operating passenger and freight services and not embark on property development for which they lack the expertise, since it was run all this time as a service oriented organisation.

So why not such property which will not be used for development of Railways in the immediate future be handed over to an appropriate state organisation for development and such profits handed over to Treasury for development of Railways? It should also be realised that such property was left in reservation by the colonial masters for future development of rail infrastructure as per their projections and vision for our motherland.

On the other hand many suggest that fares should be increased to more rational levels rather than keeping it very low.

However it is not the same as increasing telecom, electricity or water tariffs, because they affect a family unit or a household, but travel is considered essential and the distance varies with the type of business of each individual in the family unit, hence by increasing rail and bus fares the individual member of the family has to bear the increase.

Hence fares have to be increased considering the affordability of the entire family. Also it has to be noted that other than fuel, Railway also utilises telephones, electricity and water and although the price of these utilities including fuel go up in price but the Railway fares are not increased proportionately by the Government.

Sri Lanka Railway gauge is 5'-6" (1676 mm) and it has a route network of 1449 km. total track length inclusive of double lines and crossing loops at stations of 1670 km. It has a ruling gradient of 1:44. Rails used are 80 lbs/yd, on flat country, 88lbs/yd on the entire mainline from Colombo to Badulla.

These two sections are now converted to 90A in stages to accommodate higher axle loads and speeds. Around 350 km of track length is with welded rails and altogether 430 km are laid with concrete sleepers.

Average life of a rail is 30 years and that of a wooden sleeper is four years and that of a concrete sleeper is 35 years. Cost of a 20m long rail is Rs. 120,000 (incl. of taxes) compared to Rs. 1,000 in 1975, wooden sleeper (Eucalyptus) is Rs. 6,000 and concrete sleeper Rs. 7,000 (with fastenings and taxes) compared Rs. 150 in 1975.

The size of ballast is 40mm-70mm, according to standards 10'-12' ballast cushion is required under the sleeper, which means around 2200 m3 of ballast per km. Each m3 costs around Rs. 2,500. Hence, with welding of rails and labour for installation, the cost of per Km of track is around Rs. 30 m without the cost of the earth formation.

Yet then this is much cheaper than construction of a four lane road. I have also shown before my retirement, the economic advantage of using steel sleepers instead of wooden sleepers for the upcountry line, and I am glad that action is being taken to gradually introduce steel sleepers.

To be continued...