Along the budget line

Will Rs41 billion allotted to Pakistan railways in the budget revive the aging and inefficient system?

Along the budget line

Despite facing economic crises for many years and once reaching at the verge of collapse, Pakistan Railways has started showing improvement in its performance for the last one year as, currently, most of its passenger trains are leaving and arriving on time and there is a visible change in the travel ease in the national locomotives.

Similarly, the cargo business of the entity has also improved after an increase in the number of cargo trains from Karachi port to up-country. Some new passenger trains have also been introduced, including the Karachi-Rawalpindi Green-line express train.

It has initiated the process of overhauling of the decades-old signalling system by replacing the manual system with electronic signal systems and making the main track double.

After taking over in 2013, the present government has taken some corrective measures to take Pakistan Railways out from the current financial crisis.

The federal government has allocated a handsome amount of Rs41 billion in the budget for railways under federal Public Sector Development Programme (PSDP) in the fiscal year 2015-16. That includes Rs882 million for acquisition of land for Railways Container Yard Station and Railway Line from Seaport up to coastal highway at Gwadar.

Last year, the government had announced a financial package worth Rs77 billion to revive the Pakistan Railways from this position. Most of the amount went to the payment of employee’s dues as well as for making the track double from Khanewal to Raiwind (Rs441.2 million) and from Shahdra to Lalamusa (Rs570 million). A hefty amount was kept for purchasing new and overhauling old locomotives and coaches and over-hauling of the existing engines.

An amount of Rs800 million was kept for installation of computerised signalling system on main rail track between Karachi and Peshawar to ensure smooth and safe journey.

Besides providing the hefty financial package, the government had announced to lay a new rail track between Islamabad and Muzaffarabad, the capital city of Azad Jammu and Kashmir (AJK) via the famous hill station Murree.

For this purpose, newspaper advertisements were published in May 2014, inviting proposals from the national and international companies for conducting a feasibility report for the new hilly track at a height of 2,291 feet. The 107 kilometre long track will include about 50 bridges over the streams and rivers. In the last year’s budget an amount of Rs60 million was kept for this feasibility report.

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The federal finance minister, Ishaq Dar, said the federal government has allocated Rs2.795 billion for mechanisation of track maintenance, while another Rs1 billion has been earmarked for procurement and manufacture of 75 new GE Locomotives. An amount of Rs1.5 billion has been allocated for procurement and manufacturing of 50 diesel power locomotives.

The development budget for the current year, including an amount of Rs2 billion, has been earmarked for reconstruction of railways assets which were destroyed during 2010 floods, another Rs1.758 billion were earmarked for rehabilitation and improvement of track from Karachi to Khanpur.

An amount of Rs2.5 billion has been earmarked for replacing the old and obsolete track from Lodhran-Khanewal-Shahdara Bagh mainline section of Pakistan Railways. The federal government has also kept an amount of Rs1.030 billion for doubling and improving the existing track from Port Qasim to Bin Qasim station.

Railways officials blame the previous governments, especially General Pervez Musharraf’s regime, for the financial crisis. The then railways minister, Javed Ashraf Qazi, had ordered to buy 144 locomotive engines and 525 passenger coaches from China, which proved to be disastrous.

Within six months of the arrival of the first consignment of 69 new locomotives, at least 40 engines developed serious faults. They were grounded. Similarly, in the second phase, 75 more engines arrived in Pakistan, but out of them, 40 stopped functioning within a short period of time.

The Chinese coaches proved to be burdensome as they were bigger in the size so railways authorities had to make physical changes in the stations’ platforms to fit the new coaches.

During the heavy floods of 2010 the railways incurred losses worth Rs6.7 billion to the rail network, according to the National Disaster Management Authority.

Previously, the government was considering to privatise Railways because of its heavy losses, including Rs40 billion over-draft of the State Bank of Pakistan. Many train routes were either closed down or major trains on the main track ceased to ply because of growing revenue losses over the years.

The previous PPP government did not pay serious attention on improving the railways’ financial crisis that further aggravated during the regime. Even the department was unable to pay salaries and pensions. For the payment of over 150,000 pensioners, the then President, Asif Ali Zardari, had to order federal railways minister, Ghulam Ahmed Bilour, to release Rs6 billion in October 2011 for payment to pensioners on an emergency basis after heavy protests across the country.

The railways system suffered huge losses in protests all across Pakistan after the assassination of former prime minister, Benazir Bhutto, on December 27, 2007 when around 28 railway stations, 13 railway engines, and seven trains were burned, resulting in heavy losses of over Rs. 6.5 billion to Railways.

During the heavy floods of 2010 the railways incurred losses worth Rs6.7 billion to the rail network, according to the National Disaster Management Authority; several hundred kilometres of the track were washed away during the floods in Southern Punjab and Sindh.

"55 new engines are being imported from the US and many old engines and coaches are being overhauled by Pakistan Railways. If this process continues, we hope the railways would start earning profits," says Manzoor Ahmed Razi, Central President of Pakistan Railways Workers Federation.

The Nawaz Sharif government, which has been aggressively initiating the process of the privatisaion of state-owned corporations during all its three tenures, has rather unusually announced to shelve privatisation of the Pakistan Railways. Interestingly, the anti-privatisation PPP government (2008-2l013) was considering to sell it and it had appointed a World Bank consultancy firm for the initiation of the privatisation process.

"Mismanagement, corruption and theft of parts and goods from cargo trains are some of the main problems in Pakistan Railways," says Razi.

Pakistan Railways owns huge pieces of valuable lands and properties all across Pakistan and if only those properties are sold or leased out it can become profitable, he adds.

Railways police are the major burden on the Pakistan Railways as over 6000 police personnel have failed to control theft of the railway cargo and valuable parts. "Currently, goods worth Rs10 million are stolen only from the goods trains plying between Karachi and Kotri stations," he claims.

After taking over, the present government has taken measures to improve the performance of Pakistan Railwakys, including injecting Rs77 billion during the last fiscal year and another hefty amount of Rs41 billion under the current year’s federal Public Sector Development Program (PSDP) has been provided in the fiscal year 2015-16.