June 13 - 19, 2011

Pakistan Railways, which turned 150 last month, has become really old and now is frail enough to be on crutches. It has, perhaps, hit its lowest. It has reached a critical juncture and the authorities should move fast to save it from a total collapse. It needs a massive dose of financial assistance for its badly needed overhauling and restructuring. If it is not done immediately on war-footing, it might disappear from the scene like many other government departments including the Road Transport Corporation which were wiped out in the past. Unfortunately, however, the concerned circles appear to be totally unconcerned and unworried.

Pakistan Railways demanded Rs62 billion for its overhauling program of its old and outlived infrastructure during the fiscal year 2011-12 , but a provision of Rs15 billion has been made in the budget presented last week. During the current financial year (2010-11) a sum of Rs11 billion was provided but was never released.

The Chairman Standing Committee of the National Assembly on Railways, Sardar Ayyaz Sadiq, while briefing the news reporters after the meeting of the Committee, said that Pakistan Railways demanded Rs62 billion which it needed badly to keep it running. It badly needed new locomotives besides repairing and overhauling the old ones, repairs of coaches and the track and payment of withheld salaries and pension of the staff besides purchase of fuel and other exhausted items of the store.

He said that the last year the PR had demanded Rs53 billion but the cabinet had approved only Rs13.6 billion which was later revised downward to Rs11 billion but only Rs2.8 billion was disbursed which was neither here nor there. He told the news reporters that the Committee was trying to meet the Prime Minister to intervene and save the Railways from total collapse.

One of the largest public sector service organizations of the country running in profits and providing a much needed cheaper mode of traveling to the public for over 100 years has reached its present stage because of poor administration, overstaffing with highly incompetent staff and massive corruption and leakage of revenues since decades.

It has been running in losses for the last three decades or so despite having an unbelievable share of landholdings besides being a source of cheap transportation for millions of people on daily basis. Less revenue generation, mainly because of unchecked rampant corruption and flow of expenses on the high side have taken its overdraft to the tune of Rs40 billion up to March-end this year and is constantly on the rise with each passing day. It is now unable to maintain, repair and overhaul its existing assets including locomotives, rolling stock, track and even its signaling system. Now it has reached the stage that almost every week it has to cancel its two or three services for want of fuel. Almost all uneconomical routes have been suspended on the grounds of loss making. Frequent failure of available locomotives has made it difficult to maintain a credible operation.

According to some insiders, the present indifferent attitude of the government towards the serious condition of Pakistan Railways is deliberate and on purpose. Some high-ups in the incumbent government are keen to create conditions justifying its privatization. Their main attraction is the precious lands owned by the Pakistan Railways throughout the country. According to the experts, however, privatization is not the correct solution for an organization which is not purely commercial. One should keep in mind that the Railways is not a purely commercial enterprise. It is also a service department and profit alone cannot be the consideration to run it. If it is fully privatized, the business minded owners guided by purely business considerations, will be fully justified to shut down all loss-making routes, but it should not and cannot be allowed to happen in larger public interest. The Railways cannot and should not be judged by the yardstick used for judging ordinary commercial organization.

At the same time, Railways ought to be managed efficiently and honestly ensuring that there is no leakage of revenue. This is expecting too much form a totally government owned organization under the prevailing culture in our country. Experts are of the view that revamping of Pakistan Railways is possible and most suitable as well through public private partnership (PPP). At present, leading economists including those based at Harward School of Business, publicly lament the concept of privatization and call for replacing it with the PPP model.

However, some economists of international repute belonging to Indo-Pak subcontinent believe that Pakistan can learn a lot from Indian experience in this respect. About 10 years back Indian Railways was almost in the same pathetic conditions as Pakistan is faced today. But, soon it improved and again started showing profit by the year 2007. During three years (from 2007 to 2010 ) it made a whopping profits of over Rs346 billion without increasing passenger fare or freight charges. Through improved management, downsizing, outsourcing, product innovation and introducing on line-ticketing, Indian Railways has now become India's second most profitable state run enterprise.