Indian Railways Entering Lanka

New Delhi, July 30: | Updated: Jul 31 2003, 05:30am hrs
The Sri Lankan government has asked Indian Railways undertaking RITES Ltd to manage its railway and later help in privatisation.

Its Cabinet recently approved a proposal whereby RITES will be given the management control of crisis ridden Sri Lanka Railway. The company would be invited to be part of a negotiating committee to settle the terms for taking up the assignment.

The committee will be deciding on whether RITES should be given the contract for a fixed monthly or annual fees or be given a portion in the saving resulting out of the new management.

The chief executive, heads of various departments like traffic, and their second rung will be from RITES while the lower level will continue to be manned by the existing staff.

RITES conducted a study of the Sri Lanka Railway earlier this year. The study was aimed at finding out what ails the railway and what can be done to turn it around, said a senior official. The Sri Lankan government had awarded the study to RITES with a view to increase private participation and making the railway viable.

RITES recently gave a presentation to Sri Lankan prime minister Ranil Wickremasinghe where it suggested that a management contract for improving the working should be awarded and later the railway can turn to private operators.

No good buyer would be willing to take over in its present sick condition and therefore it was decided that let the railway turn around and then put it to bid, said an official. RITES may also bid for running the railway later.

On what brought the management contract to RITES, a senior official said the company had the experience of managing and turning around various railways in Africa of the same size. These were Botswana, Zambia and Tanzanian railways. Besides, the Sri Lanka Railway runs on similar gauge and rolling stock as the Indian Railways.

If RITES, an Indian railway consultancy organisation, had privatisation as the solution for Lankan railway, can similar remedy be applied to Indian Railways The two systems are not comparable. Theirs is a much smaller system than ours, said a railway official.

Besides, there may be many bidders for running the Lankan system while in the case of India no single private player would be able to run the system as it required huge investment, he said.

Another difference is the situation in which the two railways find themselves. While the Lankan railway is unable to recover even its operational cost and is finding it difficult to pay its some 10,000 employees, the Indian Railways generates enough for meeting working expenses and making some investment.

The Sri Lanka Railway department was brought under an authority last week which gave rise to protest from employees unions. As per the Sri Lanka Railways Authority Act, the present employees of the Railway department can opt to join the new authority or continue with the railways department, performing functions assigned to them by the authority.

Employees who have served a period of not less than 10 years are also permitted to retire from the Railways department with a pension. Employees who have served between eight and 10 years could complete their 10 years service and then retire.