AGʼS REPORT HIGHLIGHTS MAJOR KTMB WOES

Liabilities surpass value of assets, reveals Auditor General’s Report

AUDITOR General Datuk Nik Azman Nik Abdul Majid has proposed that the government continue to meet Keretapi Tanah Melayu Bhd’s (KTMB) “funding gap” to enable the country’s oldest train service to bear its operating costs.

This follows the National Audit Department’s findings that KTMB’s financial position was “less than stable” despite the RM1.46 billion in financial assistance pumped in by the Finance Ministry since 1992.

The second series of the Auditor General’s Report 2018 on the management of federal companies, published yesterday, stated that KTMB’s liabilities surpassed the value of its assets, to the tune of RM1.468 billion last year.

Nik Azman, in his recommendation, did not elaborate on the details of the funding gap.

The department, however, said KTMB’s financial situation was due to its management module, which emphasised implementing government policies and fulfilling social obligations to the people instead of solely generating profit from four main businesses.

The report said KTMB’s main businesses — intercity rail, KTM Komuter, electric train service (ETS) and cargo services — contributed 96.8 per cent of the company’s total revenue.

KTMB’s income statement showed that KTM Komuter and intercity rail services recorded a loss of between RM39.82 million and RM77.76 million, as operating costs exceeded the income generated from 2016 until July this year.

During the same period, KTMB’s cargo and ETS services registered a revenue of between RM4.17 million and RM59.38 million.

“Checks on KTMB’s profit and loss projection prepared by its Business Development and Corporate Planning Department showed that the company’s intercity and KTM Komuter rail services are expected to continue to record a loss of between RM107.12 million and RM307.6 million from this year until 2025,” the report said.

It said one of the reasons for the loss was the fact that ticket fares for the intercity rail service had remained stagnant since 1993.

The report said ticket fares for the service remained at between four sen and 15 sen per kilometre, depending on classes.

As for the KTM Komuter service, its fares were increased from between six and 11 sen per kilometre to between seven sen and 31 sen per kilometre, depending on the distance and payment method, on Dec 2, 2015.

“The increase in KTM Komuter fares boosted the company’s revenue in 2016. The revenue suffered a decline the following year and last year.

“Among the factors that contributed to this were the disruption caused by the Klang Valley Electrified Double Track project and the availability of the Mass Rapit Transit and Light Rail Transit in the Klang Valley.”

The report highlighted the weaknesses in KTMB’s new ticketing system, which the audit team categorised as “significant”. From December 2016 until July this year, KTMB received 36,860 complaints over its ticketing system.

The report said the company’s receipt reporting system had rendered the new ticketing system inefficient.

According to checks by the audit team, the difference in receipts from KTMB’s records and Touch ‘n Go servers from June 2016 until July this year was RM7.39 million.

KTMB, in its response on Sept 25 and 27, said to address the problem, it

had issued reconciliation reports to Touch ‘n Go to recover the difference in the collected receipts. It also said the company was closely monitoring the problem to identify customers who were wrongly penalised as a result of the failure of its automatic fare collection system.

Last month, its operations experienced glitches in advance ticket sales service, caused by bulk purchases at counters as well as the slow-loading MobTicket mobile application.

A number of passengers at the KL Sentral station had to queue for more than two hours for tickets during the disruption.

KTMB chief executive officer Datuk Kamarulzaman Zainal had said the high volume of customers trying to purchase tickets had led to a disruption in its online ticket server.

Since then, KTMB has taken several measures to address the issue, including increasing its Internet bandwidth capacity from 100Mbps to 200Mbps.

Bernama former chief executive officer and editor-in-chief Datuk Yong Soo Heong, in a commentary piece in the New Straits

Times last month, had stressed the need for KTMB to address customers’ frustrations in purchasing tickets online.

KTMB, he said, needed a rethink on additional infrastructure if the company aspired to be at the forefront of the rail business like those in developed countries.