Boondoggle unravels -- as expected

Nobody listened to those pesky economists and accountants. But empty trains have proven them right. Pity about the wasted tax money, though



The operator of the Adelaide-to-Darwin railway is locked in negotiations with 15 banks to relieve its spiralling debt levels after posting its third consecutive loss since launching the service with great fanfare in January 2004. FreightLink's annual accounts show debt jumped $36 million to $137 million in the 2005-06 financial year, a position described in September by auditor KPMG as creating "uncertainty as to whether the company will be able to continue as a going concern".

But chief executive John Fullerton said that the owners - which includes several major international engineering companies - had promised to invest an additional $14 million into the company over the next three years. Mr Fullerton was confident the debt negotiations and additional investment from the owners would be "wrapped up" by the end of next month. The new arrangements were forced on the company after it failed to sell a majority stake in the railway in August for $360 million....

But after three years of operation, Mr Fullerton admitted that international trade accounted for only between 1 per cent and 2 per cent of tonnage. It would remain a niche market for the railway, despite expectations the service would be a gateway to Asia.

The release of FreightLink's annual accounts to the Australian Securities and Investments Commission shows the company's third consecutive year of increasing losses. FreightLink posted a loss of $54.3 million for the 2005-06 financial year, slightly worse than the $53.9 million in 2004-2005 and a loss of $17 million in the service's first full year of operation....

The owners have so far injected $42 million into the project, over and above their initial $740 million investment to build the 1420km rail line from Alice Springs to Darwin. The balance of the $1.3 billion project was given by the federal, South Australian and Northern Territory governments. FreightLink has a 50-year licence to move goods along the 3000km railway linking Adelaide to Darwin. The service was launched amid great expectations of funnelling trade from Asia into Australia.

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