Irish Rail will go out of business unless State gives extra €128m a year
Published 16/11/2016 | 02:30
Irish Rail has warned it will be forced to shut lines due to safety concerns unless an additional €128m a year is provided until 2021 to shore up its creaking balance sheet.
Despite reducing annual costs by €75m, the State railway company faces a financial crisis which could result in as many as four lines closing.
The lines under threat due to low passenger numbers are Limerick to Ballybrophy, Gorey to Rosslare, Limerick Junction to Waterford and the section of the Galway to Limerick line between Ennis and Athenry. The State is subsidising each journey on Limerick to Ballybrophy at a cost of €552, and each trip on Limerick Junction to Waterford at a cost of €362.
Chief executive David Franks said that "continuous underinvestment" in recent years would impact on safety and the quality of service being provided. He said efforts to grow services on little-used lines had been unsuccessful. In some cases, fuel costs weren't covered.
"If the funding doesn't come we will find ourselves facing very difficult challenges in the relatively short term," he said. "The safety of the network would deteriorate, the performance would deteriorate. We may have reduced line speeds over track which is not of the standard we would wish it to be. Any asset which needs money spent suddenly is going to cause very great difficulties.
"If we get to a stage where we think we cannot run on a particular route, we will have to stop operating. That's the position we're moving towards."
Mr Franks was speaking at the launch of a public consultation process on the future of the rail network, which is being run by the National Transport Authority. A NTA review says that Irish Rail has accumulated losses totalling €125m between 2009 and 2015, despite reducing costs. The losses were "primarily" as a result of reduced Government funding, which fell by almost 50pc to €97m in the six-year period, and falling passenger numbers.
"The net result of this practice has been to weaken the balance sheet to the point where it is not possible to incur any losses in the future without risking insolvency," it says.
"This unsustainable level of funding has resulted in the deterioration of the infrastructure asset, giving rise to increased safety risks and unacceptably high commercial risks to the various revenue streams."
It costs €550m a year to operate the rail network. The review says an additional €103m a year is needed out to 2021 - or €516.7m - to bring investment up to the level required and purchase new fleet. However, it adds that Irish Rail should be compensated for the loss of subvention funding in recent years. This would increase the annual payment by an additional €25m to a total of €641.8m - or €128.4m a year.
NTA chief executive Anne Graham said that no decision had been made to close lines, but that it was consulting with the public to help grow numbers and prioritise services. Closing the four lines could save around €17m a year, she said, adding the consultation was about "putting the facts out there''.