The ministry has directed BR to stop passenger train services because
it is an expensive exercise. More details as to when the service will
be suspended are expected early next week. In October 2006, BR
indefinitely suspended the day passenger train service and now the
night train is to be stopped.
The passenger coaches will be sold to raise funds as part of a strategy
to re-finance BR which made a P78 million loss over the last year. The
company now requires a recapitalisation of close to P600 million.
Swartz said in Parliament yesterday that halting the passenger train
service is a necessary evil that must be tolerated for the success of
the company.
BR is expected to announce the indefinite suspension of the train
service early this week. BR, spokesperson Linah Masenya said details
will be available at a press briefing next week.
Swartz said they will have to adopt measures to reduce the BR’s
operating losses, which ballooned to P78 million from P10 million the
previous year. The measures include the suspension of the passenger
services until further review, Swartz told Parliament. He said the
passenger services account for less than 10 percent of BR’s operating
revenues, and have been consistently making losses.
The minister said in 2005-2006, BR’s costs of passenger services were
P38.8 million, while revenues were only P9.1 million resulting in a net
loss of P29.7 million. Swartz said a total investment of P586.5 million
will be required to overcome BR’s shortage of locomotives and rolling
stocks in order to meet current demand for traffic. He said this will
be financed by converting P104 million outstanding loans from
government into equity, disposing off locomotive and rolling stock
assets that are no longer useful, use of BR reserves and guaranteed
borrowing, on the basis of a debt-equity ratio of 0.6:1.
Mmegi Online
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