Railways lost 25 million, but leaves other benefits

Ecuadornews:

48% of the revenues of the public company Ferrocarriles del Ecuador came from the State in 2017 (USD 24 million). The remaining 52% came from the sale of Tren Ecuador product tickets, but that is not enough to cover current expenses, acknowledges its manager, Fabiola Arévalo.

For eight years this state company, which was born in April 2010, has obtained USD 35.5 million from the sale of tickets for eight expeditions. Currently six expeditions that have attracted more than one million passengers. For the trips they pay between USD 20 (Tren de la Dulzura) and USD 100 (Tren de los Volcanes III).

The expedition with the most demand is Nariz del Diablo (Sierra Centro), which registers 45,000 travelers, only in this 2018. The Crucero Train, another tourist product that was implemented in 2013, has left earnings of USD 6.6 million.

Each ticket in this tourist option costs USD 1 735, but Arévalo considers that it stopped being profitable and, like the rest of the expeditions, entered into the cost-benefit evaluation of each one. For this process it has been considered the fact that these routes allow 180 enterprises to be maintained by the visits of the passengers.

There are 2,000 families that depend on these businesses and this has been the main reason to stop the closure of this public company. Thus, within the optimization plan of the State, the future of this company is still under analysis. According to the General Secretariat of the Presidency, its absorption by the Ministry of Tourism, which heads its Board of Directors, has not been contemplated.

This newspaper requested an interview with Minister Enrique Ponce, but until yesterday there was no response. Richard Dávila, president of the Receptive Tourism Association of Ecuador, believes that the operation of the train must be maintained because it is a unique product.

“What was not right was to focus it on a market that was too high. As a public service, the train works well all over the world.” According to the figures managed by the Public Company Coordinating Company (Emco), Ferrocarriles has lost USD 25 million from 2016 to July of this year. For Patricio Jaramillo, technical advisor of the company, these negative figures were expected from its creation.

“Since the project was conceived it was known that it should be subsidized by the central government. There is no tourist train in the world that throws positive values “. However, Francisco Rendón, owner of Emco, was emphatic when he said that a company that lives on public funds is not a company. And with this premise is being evaluated this and the rest of state firms. A vital injection of resources for Railways was that of the Ministry of Education, through the Tren Educativo school program.

According to an audit by the Comptroller’s Office, in 2016 alone it paid USD 6.9 million for students with high grades to travel on trains. After five years of operations and positive results, thanks to the contribution of the Treasury, the authorities explain that the investment, operating cost, self-management income and maintenance were “transparentized”.

The State allocated USD 380 million, which was used for four years in civil works to make the project viable. 

As of 2016, when all this investment was finished, they began to weigh the expenses, which have not been able to be covered with the income from the business line. For example, the monthly maintenance of 17 of the 25 enabled units costs USD 25,000. And keeping six expeditions active and the Cruise Train demands USD 1 million more per month.

This does not include other items, such as salaries of all 440 employees. So far no personnel has been disconnected, although retirements of 71 workers are in process. The per diem, payment of overtime and travel of officials are also under review. To avoid further losses, Arévalo mentioned possible concessions and investment from public and private companies for the rehabilitation of the entire railway line.

Up to today 508 km of the 965 that make up this network are enabled. The sale of packages without all the included services has also been analyzed. Diego Padula, president of the Tourism Agencies of the country, also considered this last option, to prevent foreign tourists from comparing their Cruise Train cost with a trip to Galapagos.

For national tourists, however, this route from Quito to Duran is a luxury. It must be taken into account that this company was also created by Decree to administer the passenger and freight railroad, but until today it has not materialized.

The rehabilitated rails would not support cars with cargo, said Jaramillo. The management of this company, in addition, has been subject to 36 special examinations of the Comptroller since 2012.

Revenue was audited for tickets, purchase of goods, among others, where there have been evidenced payments and contracts without endorsements, accounting mismatches and debts receivable amounting to USD 2.9 million. In a report to the financial audit of 2014, for example, there is talk of funds registered for USD 4.5 million, for the passenger transport service, which were not justified by the auditors.

These problems were overcomed, according to Jaramillo, with the implementation of a new accounting system. Accounts receivable from entities such as Acerías del Ecuador, he added, are in the process of being recovered. (I)

Source: https://www.elcomercio.com/actualidad/ferrocarriles-perdidas-millones-tren-crucero.html