Irish Rail is considering putting a contract worth €2 million a year in sales out to tender as part of a shake-up of the catering services on its Dublin-to Belfast route.

A spokesman for the State company yesterday said that it was reviewing the operations of its Dubel subsidiary, which provides the catering on the Irish Rail trains operating the route. Dubel has been losing more than €100,000 annually for the past two years, although it was profitable for more than a decade before that.

Some sources yesterday suggested that Irish Rail was preparing to put the contract to provide catering for the route out to tender. However, the spokesman said the company was "considering all options".

If it were put out to tender, it is understood that the deal would be structured as a commercial opportunity. Under this system, the operator would take the revenues and be responsible for the risk, rather than simply being paid to provide the service. The service generates around €2.1 million a year in revenues.

Dubel is registered in Belfast but is an Irish Rail subsidiary. The company is exempt from publishing full accounts, but its balance sheet for the year to December 31st, 2001 shows that its net liabilities jumped to £133,338 sterling (€190,000) from £28,000 the previous year. This loss is also reflected in the profit and loss account, which was £133,341 in the red.

Irish Rail is also planning to pull out of its involvement in the Oslo bar and restaurant in Connolly Station, the route's Dublin terminus. The State company's other catering arm, Network Catering, operates this in partnership with Mr Paddy Madigan, who owns a number of pubs in the capital.

The Irish Rail spokesman said that Network Catering had decided to focus on its core business, which is providing in-train catering. The company is negotiating the sale of its 51 per cent interest in the business to Mr Madigan. The Network-Madigan partnership is leasing the premises from CIÉ properties, which owns all the land and buildings used by the State's public transport companies.

According to its current annual report, Irish Rail's catering services made a profit of €222,000 on the back of a €13.3 million turnover in 2002.

The previous year the division made a loss of €246,000 on a €13.4 million turnover. However, the company cut catering costs by €500,000 in 2002.