After Pakistan Steel, another 2 giants in the public
sector — Pakistan International Airlines and Pakistan Railways —
have shown marked improvement in the balance sheets during the current
The PIA turnover has resulted in significant increase
in its profit. As compared to an operational loss of over Rs. 2 billion
in 2001 the Airline posted a profit of Rs. 1.9 billion in 2002 and is
expecting its profit to exceed Rs. 2 billion in 2003. During Jan-Sept
2003 it has already posted a profit of over Rs. 1.3 billion.
This have been possible through a massive
restructuring and rehabilitation programme initiated by the government
about 2 years back with large injectment of capital by the federal
government. Last year government injected Rs. 2.9 billion. Another Rs.
2.16 billion was provided in the current budget. These funds have been
provided as advance against equity. Shares for this amount are to be
issued to the government shortly. Profitability of the national flag
carrier is likely to increase further in the coming months because of
resumption of flights to India, new connection over passing India and
addition of new planes. According to independent financial analyst the
likely growth in profit will be overshadowed by significant equity per
share dilution. As per airline revival plan, the government has injected
over Rs. 4.5 billion of equity at Rs. 10 per share. PIA will have to
expand its operational activity without adding much to its
administrative expenses for maintaining the present growth ratio in its
Addressing a press conference, the railway minister
claimed that as a result of an aggressive marketing policy for
generation of business in freight and passenger sector, Pakistan
Railways has generated additional revenue of Rs. 270 million in 2003 as
compared to 2002. He was of the view that the revenue generation will
further increase as the efforts of PR administration has set a trend of
substantial increase in transportation of goods and passengers. Measures
were being taken for bulk transportation of goods including crude oil
from Badin Oil Fields to ARL and transportation of iron and steel from
Pakistan Steel to Lahore. Hope for increased revenue in future is
supported by the fact that the first 10 days of December showed an
increase of about 35 per cent as compared to an average increase of 10
per cent for the earlier 11 months, the minister added.
A turn around in the economy of Pakistan Railways is
visible as the organization which was showing an operational loss of Rs.
3 billion about 3/4 years back is now showing some profit. The current
year is likely to show a profit of nearly Rs. 1 billion.
The scale of volume of Pakistan Steel rose to Rs. 23
billion in financial year 2003-03 from Rs. 14 billion during 2001-02. It
showed an increase in the pre-tax profit of Rs. 871 million as compared
to last year.
The improvement in the public sector's performance
during the last 2 years is undoubtedly encouraging. Most of these have
been able to cut their losses and some of them have started showing
profit. But this has been possible only through a massive injection of
capital to implement their planned expansion, replacement of old
machinery with new and training of technical staff in latest technology
to secure their maximum share in the market in their respective sectors.
Many financial experts however, doubt the rationale of making heavy
investments on the proposed expansion and modernization. They apprehend
that after sometime these units would again lag behind and return to the
earlier position of being unviable because of proverbial inefficient and
sometime corrupt management of public sector enterprises. After
injecting such massive doses of financial help from public funds, the
government should also develop a system of close monitoring of these
units to ensure that they do not receed to their earlier position.