Saturday 18 September 2021

Passengers only cover 25% of Incofer train costs

The Incofer says it needs ¢1.5 billion of government aid to survive the year

Paying the bills

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QCOSTARICA – While President Carlos Alvarado promotes the electric train project that he could not get off the ground before his mandate runs out in 5 months, though promises to have ready to go for the next government, there is a more pressing need to aid Costa Rica’s mass transit rail system.

Fewer runs and a decrease in passengers due to the pandemic and low fares keeps the country’s commuter train on a collision course

According to the latest figures, the Instituto Costarricense de Ferrocarriles (Incofer) – national railway – needs some ¢1.5 billion colones from the State to survive this year.

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This due to a decrease in passengers caused by the pandemic and that fares only cover 25% of the operating costs.

In addition, up to 33 of the 84 runs or trips that were had to be suspended, resulting in the unemployment of 104 people of contractor companies: 90 of positions related to the collection of tickets, crew, maintenance of roads and workshops, and another 14 of cargo services.

Before the health crisis, on average the commuter train carried 12,782 passengers daily. Now, that figure has fallen to 4,375, according to Marco Coto, Incofer Operations Manager.

That figure is up to the average 2,300 daily passengers in 2020, forcing the Incofer to cover 78% of operating costs.

The pandemic deepened the crisis at the Incofer, whose finances have been in the red since its reactivation in 2005.

“Before the pandemic, the difference between what you got for the average rate versus operating costs was 40%. That difference now with the covid-19 and the decrease in itineraries, labor contracts and passenger capacity on the train increased to 75%.

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“Within the concept of rate and the existing structure of the Aresep (Regulatory Authority of Public Services), a subsidy term or something similar is not available. What is left is that the Incofer covers this difference with passenger fares, use permits and cargo income,” explained the manager.

Currently, they operate eight new trains and eight old locomotives, for a total of 16 units.

However, Coto said, the 51 runs offered cannot function at their maximum capacity due to the measures dictated by the Ministry of Health.

With this outlook, he recognized that covering 75% of the operating cost of the trains is not profitable at all and could hardly be sustained for long.

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“We project that for the next year the runs will be resumed with normal capacities in order to find a balance and improve income,” he said.

As of Monday, September 6, in addition, passengers can pay electronically, which aims to become another plus for users.

Government rescue

Elizabeth Briceño, executive president of Incofer, said that they need a “push” from the Government to continue operating and that is why they asked for ¢1.5 billion colones to remain solvent for this year.

Elizabeth Briceño, who will step down next year as the Incofer president, says she hopes to get railway’s finances in good shape.

Although she acknowledged that in the last two years they have had liquidity problems, she ruled out that the next period will have difficulties, expecting an increase in passengers.

“With the initial estimates of budget and capacities, we consider that we will not have an inconvenience in terms of income, in addition to the additional activities that generate income and taking into account the ¢2 billion transfer that the MOPT would make to us in 2022.

“It is important to mention that this is an initial estimate because this is at the level of the preliminary budget draft presented and the Ordinary Budget 2022 is approved by the Board of Directors of Incofer,” declared Briceño on August 31.

No financial projection

Since the days back in 2005, the commuter train service has been mire in financial difficulties, this confirmed by the Office of the Comptroller General of the Republic (CGR), who determined that the Incofer does not carry out a financial analysis that exceeds the current year, since it only reviews the Institutional Cash Flow and the contributions that the Central Government makes to cover part of its annual operation.

In addition, it pointed out that the Incodfer does not have projected financial statements that show the effect of applying actions under different scenarios.

“With regard to the supervision of the railway services contracts exercised by Incofer, there are weaknesses in the documentation that supports those received to the satisfaction of the services (…),” warned the controlling body.

 

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"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

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