The Cairngorm Funicular Railway is now effectively in public ownership after it was transferred from its debt-burdened company to the Highlands and Islands Enterprise.

As The Herald reported two weeks ago, the move is seen as the only way to ensure the £20m tourist attraction's future in the face of the £6m debt of CairnGorm Mountain Ltd (CML).

Highland Council has agreed to waive a £1m loan given to the company when it opened in 2001. Agreement has now been reached with the Bank of Scotland, the company's other main creditor, over its loan of more than £3m. Meanwhile, Highlands and Islands Enterprise has written off its own loans of more than £2m.

Bob Kinnaird, chief executive of CML, said: "The level of stability that this new arrangement will provide has to be good news for everyone with an interest in the continuing success of CairnGorm. Without HIE's direct involvement and intervention, none of this could have happened."

Climate change is said to have undermined the railway's fortunes from the start. It never achieved the 150,000 skier days originally forecast. The attraction averages around one-third of that but does, however, draw in almost 150,000 non-skiers a year. Indeed, recent figures from VisitScotland show that the funicular remained in the top 20 paid-for visitor attractions in Scotland, although the number of people using it last year fell by 4.3% to 149,700 from the 2006 figure of over 156,000.

CML has long recognised that it needs to diversify its operation, but has been unable to do so because of its debt. It is hoped that the HIE takeover will allow a reduction in the firm's debt allowing "future ambitions to be explored". However, operation of the railway will be put out to tender.

Douglas Yule, HIE's director of operations, said yesterday: "We will now be meeting with stakeholders to draw up plans which can secure the sustainable future operation of the funicular railway."

Over the next six months options will be examined for diversification in addition to winter sports. "However, as far as the day-to-day operation goes, it will be business as usual at CairnGorm for some time to come. Later on, and in the interests of transparency and best value, tenders from parties interested in the right to operate the facility will be sought," Mr Kinnaird said.

HIE already owns the railway itself, all the infrastructure and the land it stands on. Its investment accounts for £16.9m of the £19.7m total cost of the funicular project.

Ramblers Scotland has called on Audit Scotland and the Scottish Parliament to investigate HIE's investment. The main contractor was Morrisons, whose former chairman Sir Fraser Morrison was chairman of HIE when the original decision was taken to build the funicular. The Scottish Executive was satisfied that there was no impropriety.