Pakistan Railways has generated additional revenue of Rs. 270 million in 2003 as compared to 2002

From SHAMIM A. RIZVI, Islamabad
Dec 29 - Jan 04, 2003

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 year.

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 profit.

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.