More cuts feared as CIE bailout of €36m is withdrawn
THE Government has dramatically withdrawn a €36m bailout for CIE that it had approved just two months ago with the aim of preventing major cuts in bus and rail services.
The Irish Independent has learned that the semi-state transport company will be told it has to either sell assets or borrow money to keep its services in operation this year.
The U-turn means that further cuts in services operated by Iarnrod Eireann and Dublin Bus are likely, with passengers also facing fare increases.
In July, Transport Minister Leo Varadkar announced a €36m cash injection to ensure that CIE remained "adequately funded for the immediate future".
However, this newspaper has learned that none of the money was ever handed over. CIE had expected to receive it in the coming weeks.
A spokesman for Mr Varadkar confirmed that the cash offer had now been withdrawn.
Selling assets and borrowing money are being explored as an interim solution to the company's cash crisis, until a new business plan is developed.
"At present, the Government is exploring alternative ways to make up the shortfall -- other than exchequer funding -- including the sale of non-core assets and new credit facilities," said Mr Varadkar.
"The company is working to develop a business plan that will allow the company to operate on a financially sustainable basis in the coming years."
Despite not yet filing its accounts for 2011, unpublished figures obtained by the Irish Independent show that Iarnrod Eireann and Dublin Bus face a loss of almost €40m because of falling passenger numbers and cuts in their state grants.
The two companies had been relying on the €36m payment to keep services running. Bus Eireann will not receive any of the money and is expected to post a modest surplus of €500,000 for 2011.
CIE said it was up to the Government to decide how the additional funding was secured.
"The means of providing the additional funding to CIE is a matter for Government," a spokesman said. "We have, in any event, been exploring the sale of assets. There are ongoing discussions with regards to the ongoing funding of the group."
Documents released under the Freedom of Information Act show that the Department of Transport is closely monitoring finances in CIE and that high-level meetings have taken place in recent months at which the company's dire financial situation was highlighted.
CIE's state payments, called the subvention, have dropped by more than €60m since 2008, with further cuts due in the coming years.
It was paid €242m this year, with payments expected to fall to €209m by 2014.
The situation became so bad earlier this year, that Irish Rail requested early payments of its subvention for July and August because of mounting pressures.
Passengers have already been hit with fare increases this year of up to 6pc, with more expected, and Iarnrod Eireann has announced some cuts in rail services at off-peak times.