Bai-out for Railways?

ONCE the largest and most efficient mass transit and freight system in the country, Pakistan Railways has fallen on bad days, thanks to its growing operational and administrative inefficiencies, corruption and overstaffing, all of which has resulted in a burgeoning financial deficit that currently stands at Rs 35 billion, while the mismatch in monthly income and expenditure stands at Rs 3 billion. A Recorder Report has it that the General Manager (Operations) has sought a hefty bailout package from the government.

Interestingly, Shaukat Aziz government too had sought funding of Rs 30 billion for the rehabilitation of old train tracks, the signalling system and maintenance of 15,000 bridges, 80 percent of which have completed their lifespan. However, what became of the request is not known.

Greater economic integration at both the regional and global levels in this age of globalisation has become a necessity for every state. With the sole exception of maritime transport, an efficient railway system, with the state of the art rolling stock is best suited to meet the needs of bulk haulage in this age of globalisation.

The financial squeeze Pakistan Railways is caught in has affected its modernisation and upgradation, which has deprived it of a competitive edge, though being a state-run monopoly, it has continued to exploit its monopolistic hold, and in the process has lost both efficiency and profitability. It seems that, quietly assisted by officialdom, the road transport sector has made sizeable inroads into the PR domain.

There is an acute shortage of locomotives and bogies, while as many as 200 locomotives have been lying idle due to non-availability of spare parts.

Locomotives with haulage capacity of at least 18 bogies or 2000 tons of freight are needed, but there is no money to import them, which, according to General Manager (Operations) has raised the possibility of closure of railway transport in the country. This could well be a pressure tactic to make the government cough up the package which the government, in all probability, will be unable to fork out, given the mega post-flood reconstruction and rehabilitation work that lies ahead.

The government has already subjected PSDP to drastic pruning under the tightening financial crunch, though there has been no reduction in the number of ministers, which stands at 60 plus. Secondly, the response from the donors has at best been lukewarm, marked by advice to broaden the tax base, generate more resources and ease out tax exemption such as on agriculture, and do some belt-tightening which is perfectly justifiable, though resistance from the agriculturist lobby, with its strong presence in both the houses of parliament may make this a non-starter, yet again.

The financial haemorrhage sustained by Pakistan Railways and other such entities has made them a liability. It would be appropriate here to quote from the audit report relating to the Infrastructure Business Unit of Pakistan Railways for the year 2009-10. The report had revealed the loss of over Rs 7,749 million as rules and regulations were set aside in the award of contracts, acceptance of tenders, recovery of toll tax, land usage charges and licensing of booking agencies etc.

Financial irregularities were also detected in the Infrastructure Business Unit of Pakistan Railways, which is entrusted with such functions as construction and maintenance of rail tracks, buildings and signalling system, and the Railway Board, which was put at Rs 5,581 million.

A loss of Rs 114.217 million was incurred in awarding contracts without due process of competitive bidding, while a loss of Rs 23.236 million was sustained on account of an abnormal increase in the cost of works – Dailymailnews