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PROFILE

MANZOOR AHMED RAZI

COLUMN FOR THE RECORD
SOCIETY KCR: STRATEGY FOR EARLY REVIVAL
CORPORATE PROFILE SUI SOUTHERN GAS COMPANY LTD

 

KCR: STRATEGY FOR EARLY REVIVAL

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Most of the Karachiites, particularly families and children, look forward to the early revival of KCR and start of commercial operations

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By MUHAMMAD BASHIR CHAUDHRY

Sep 22 - 28, 2003 
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According to press reports, a high-level meeting at Karachi on 23rd July 2003 decided in principle to revive the operations of the Karachi Circular Railway (KCR). The meeting presided over by the Sindh Governor was attended by the Sindh Chief Minister, the Railways Minister, some of the Provincial Ministers, the Chief Secretary, the Chairman Pakistan Railways, the City Nazim and other Officials. KCR project envisages to reduce the travel time and provide the cheapest, comfortable and environment-friendly mode of transport to the citizens of Karachi. At the meeting, it was also said that the Chinese experts had studied KCR in the recent months and its revival was a part of a multi-model system for meeting urban transportation needs of the city.

The Railways Minister is said to have informed the meeting that his department would extend all possible cooperation in reviving KCR. The Sindh Governor formed a committee, which is headed by the Sindh Chief Secretary and includes the City Nazim, the General Manager of Railways and the concerned officials as its members. The committee would study all aspects of KCR and recommend ways and means, within a month, to make it a cost-effective project that is viable and sustainable on long-term basis. The governor reportedly said that the city was in need of an effective and well-meaning transportation system and that KCR should be in place on priority basis.

Most of the Karachiites, particularly families and children, look forward to the early revival of KCR and start of commercial operations. About two years ago the Federal Government had agreed, in principle, to revitalize KCR and had asked the Sindh Government to submit a detailed PC-I. Subsequently, KCR project was studied by the Chinese and other experts and a number of presentations were made to the government. The Committee might review these reports and presentations and chalk out a plan to make the KCR project functional at an early date. This article is an attempt to flag the KCR issues and offers suggestions for consideration by the Committee/the government, to make KCR operational as soon as possible.

At present KCR appears to be like an 'unwanted baby'. The Railways do not want to operate it whereas the City Government has no funds to make KCR operational. With the present KCR issues, genuine private investors might not be eager to take it over for revival. For the sake of the Karachiites, the government has to nurture it for the time being until alternate arrangements are firmed up. Moreover, the KCR infrastructure on ground has to be protected. Pakistan, a poor developing country, cannot afford to lose huge capital expenditure made to originally build the KCR project. The Federal Government, the Pakistan Railways, the Sindh Government and the Karachi City District Government are urged to incorporate a joint venture company to own and operate the KCR system for the time being. The stakeholders can devise the policy guidelines for the operation of the joint venture. The Board of Directors of the company might be from all the stakeholders including some prominent Karachiites. The City Nazim could be the Chairman of the Board of Directors. Actual operations of the company might be administered by the professional managers comprising largely the senior officers/experts from the primary stakeholders. The joint venture company is expected to provide the focal point for resolving the issues presently obstructing progress and for the revival of KCR.

It is said that money makes the mare go. This is very true for early revitalization of KCR operations. The proposed joint venture company may be suitably capitalized by the stakeholders. Looking at the size of the KCR operations, Rs 1.00 billion initial paid up capital appears justified; however, the stakeholders might like to initiate the process with a more modest contribution. It might be realized that the setting up of the company and its start of operations on proper lines would take sometime. Therefore, the stakeholders might consider its early incorporation, financing and staffing. A number of senior technical people might have to be taken on deputation from Pakistan Railways. In due course, the joint venture company would institute its owns programmes for developing expertise in various disciplines.

 

 

Apart from technical matters, the KCR project is confronted with encroachment on its land and the claims of over land ownership both by the Pakistan Railways and the City Government. Resolution of both these issues should pave the way for smooth implementation of the KCR revival project. Survey of the actual encroachments would help devise the steps to reclaiming the land and rehabilitate the people involved. As regards the ownership of land, the Committee has been asked by the Sindh Governor to also look into the matter. The two claimants of KCR land are urged to coordinate with the Committee to resolve the land ownership issue amicably and thus pave the way for early operations of the KCR.

The City Nazim in the high-level meeting reportedly clarified that the City Government was not in a position to make a huge investment to revive the KCR project. He also said to have observed that if any private entrepreneur likes to invest on build-operate-transfer (BOT) basis, the City Government will welcome the investor. The financing issue is very important and therefore deserves careful consideration. Ways and means shall have to be found to bring the project on stream at the earliest, within the financial and technical resources, the stakeholders are ready to commit for the project. Some of the proposals are mentioned below:

1. Subject to technical and pragmatic considerations, the KCR project might be implemented in three to five phases instead of one big integrated project. This should reduce the up-front funding requirements. It might allow KCR trains to start running within a short period. This would test the system on the one hand and on the other keep the encroachers away from KCR properties. The first phase may comprise more or less the KCR system as it was operated by the Pakistan Railways before it was closed down a few years ago. Other phases might include doubling the tracks, extension of tracks to other destinations and improving the quality of passenger bogies as well as other equipment. After the last phase is implemented, one should not be surprised if the KCR trains more or less match the air-conditioned light rail transport operated by the Light Rail Transit Authorities in the large cities of the developed countries.

2. For phase one of the KCR project, the Pakistan Railways might lease out 3-4 trains including engines and other allied equipment to the joint venture company. The payment may start after a grace period of 2-3 years. With the proper scheduling of the trains and checks on ticket-less passengers, the joint venture company is expected to generate sufficient cash to meet all expenses from the very first year. If the train service is regular and there are more frequent trains during rush hours, traveling public are expected to patronize the KCR trains in a big way. Other phases of the project can be taken up in due course.

3. At the high-level meeting, the Railways authorities had reportedly informed the participants that the Railways would extend its assistance to upgrade KCR infrastructure, but the City Government would be responsible for upgrading level-crossings and building flyovers if needed. The City Government might collaborate with the Railways in this regard to make the KCR system ready for the first phase of the project. Due to increase in population and the number of vehicles plying on the roads, it is expected that a number of new flyovers over level-crossing or bridges at appropriate places for the pedestrians shall have to be constructed for the first phase of the project.

 

 

4. For making the first phase operational, the City Government might seek special grants from the federal and the provincial government. Sale of KCR land may not be an option at all for raising resources for implementing the phase one. As a last resort, local banks might be approached for short-term bridge finance. BOT financing is costly, time-consuming and difficult to negotiate and therefore might not be considered in the early phases of the KCR project. The BOT investors usually ask for many concessions, exemptions and guarantees that might not be possible in the time-frame envisaged for start of KCR commercial operations.

The KCR project would be a test case for implementing mega projects through close cooperation among the federal, the provincial and the city governments. As the total cost of phase one of the overall KCR project would be modest, there are fair chances of the stakeholders agreeing on paid up capital contribution and on other issues in the spirit of give and take and thus successfully implementing the phase one. Once commercial operations start and results are there for everybody to see, it would be easier to mobilize grants, raise loans or increase the paid up capital of the joint venture company for taking up next phases for implementation. The City Nazim and his team, through tactful handling of the issues, can make the big difference in realizing the KCR project in a phased manner as suggested above. The federal and the provincial government are expected to support them for providing an easier, cheaper, safer and environment- friendly mode of transport to the people of Karachi.