KUALA LUMPUR: As part of the rationalisation plans, Keretapi Tanah Melayu Bhd (KTMB) is expected to return to the black with a profit of RM33.1 million in 2015, said Prime Minister Datuk Seri Najib Razak.

As part of KTMB’s turnaround plan, Najib said the country’s largest rail service is looking at rationalising its services by discontinuing unprofitable routes, and possibly charging higher fares for cargo services and ticket prices for passengers using its rail services.

There are also plans to set up feeder bus services at the various train stations in the country as part of the turnaround initiatives, said the prime minister.

“With the implementation of the initiatives, KTMB is expected to record a profit if RM33.1 million in 2015. Therefore with better financials ahead, KTMB is able to sustainably operate and reduce its financial dependence on the government,” said Najib, who is Finance Minister, in reply to a written question by MP Gopeng Dr Lee Boon Chye in Parliament yesterday.

KTMB, owned by the Finance Ministry, has been recording losses since its corporatisation in 1992. It had until Dec 31, 2013 (audited accounts) accumulated losses amounting to RM2.5 billion.

It was also reported that an audit conducted in 2011 showed that the company incurred RM100 million in losses, which nearly tripled to RM280 million in 2012.

“Low fares are among the main contributing factors that have led to KTMB racking up losses,” said Najib.

He said, for example, the fares for the commuter service are currently 10.8 sen per kilometre compared with 15 sen per kilometre for LRT services.

Najib said the other main contributing factor was KTMB’s high operational cost in maintaining its rail coaches and infrastructure, plus high electricity and diesel consumption, and manpower costs.

He reckoned that as a result of the deteriorating conditions of KTMB’s rail coaches and infrastructure in stretches along the east coast and south, nearly 40% of its operating expenses is spent on manpower costs.

This article first appeared in The Edge Financial Daily, on October 16, 2014.