Nepal's Only Railway Faces Financial Crisis Amid Management Hurdles

Dhanusha. Nepal's only railway service is facing a severe crisis due to financial losses, managerial instability, a shortage of skilled manpower, and administrative delays. While the service has become more convenient for passengers, the financial and structural health of the railway company continues to deteriorate.

Currently, the rail service operates from Jaynagar, India, through Janakpur to Bijalpura in Mahottari. Running three times daily, it has become a reliable mode of transport for locals.

Ramsurat Mandal, a 65-year-old resident of Inarwa, says the rail service has made daily life easier, allowing him to send fresh rice and vegetables to family members. According to him, while a motorcycle trip from Inarwa to Janakpurdham takes about an hour, the train covers the distance in just 15 minutes.

The old narrow-gauge rail service, which had been operating since 1994 B.S., was closed in Magh 2070 B.S. for broad-gauge expansion. Following the completion of the 38-kilometer broad-gauge line from Jaynagar to Kurtha, service resumed on 19 Chaitra 2078 B.S.

The service has since expanded to 52 kilometers, with stations including Bijalpura, Singyahi, Loharpatti, Khutta Piparadhi in Mahottari, and Kurtha, Janakpurdham, Parwaha, Baidehi, Mahinathpur, and Inarwa in Dhanusha, extending to Jaynagar, India.

Despite its effectiveness for passengers, the company has been operating at a loss since its inception. According to the Nepal Railway Company Limited's Business Plan 2082, the company earned 192.12 million rupees against expenditures of 673.7 million rupees over the five fiscal years from 2076/77 to 2080/81. This resulted in a total loss of 481.58 million rupees, nearly triple its revenue.

In fiscal year 2076/077, the company earned 3.97 million rupees against 11.3 million in expenses. In 2077/078, it earned 4.01 million against 19.8 million in expenses. In 2078/079, revenue was 25.4 million against 110 million in expenses.

In fiscal year 2079/080, the company earned 73.8 million against 269.9 million in expenses, while in 2080/081, it earned 85 million against 262.7 million in expenses.

Currently, the company's monthly revenue is approximately 7.5 million rupees, while expenses reach 12.9 million rupees. Ticket sales, land and warehouse rentals in Birgunj, and shop rents are the primary sources of income. Unable to cover costs, the company has been taking loans at a five percent interest rate with government guarantees.

As of the end of Ashar 2081 B.S., the company's total debt, including principal and interest, has reached 790.42 million rupees, creating significant financial pressure.

A major cause of the deficit is the cost of technical staff brought from India. Initially, 26 were hired, and 17 Indian staff members remain. The company pays the Indian Konkan company 7 million Indian rupees—approximately 11.2 million Nepali rupees—monthly for salaries, cleaning, and maintenance.

In comparison, the monthly salary for 103 Nepali employees, including the General Manager, is only 1.7 million rupees. The company suggests that if these roles were managed by skilled Nepali personnel, costs could be significantly reduced.

The lack of permanent staff is another critical issue, with most employees working on contract or daily wages. Training and processes for developing permanent technical staff have not been effective. The absence of a section workshop, a shortage of domestic drivers and station masters, lack of fueling service stations, and the need to import fuel from India further inflate operating costs.

Management is also hampered by the long-term absence of a General Manager, leading to delays in administrative decisions, financial approvals, and service expansion plans.

To make the rail service self-reliant, the company has proposed several options. Leasing 28 acres of land in Raxaul for commercial use is estimated to generate about 80 million rupees annually. Additionally, there is a proposal to establish a railway museum featuring a century-old steam engine to generate revenue through ticket sales.

Local traders and the public have emphasized the need to expand freight services alongside passenger transport. They argue that long-term profitability is impossible with passenger service alone, necessitating the development of commercial freight, tourism, and alternative income sources.

Stakeholders believe that with timely management reforms, the development of skilled Nepali manpower, the expansion of freight services, and a concrete debt management plan, Nepal's only railway could move toward profitability. Otherwise, they warn that the debt burden will continue to grow.