Pakistan Railways: 62 out of 104 trains continue to incur losses

Remaining 42 trains contribute over 80% of revenue

LAHORE: The earnings chart of the cash-strapped Pakistan Railways (PR) illustrates patent inequality in its passenger earnings segment, with only 40% of trains contributing over 80% of the revenue for fiscal year 2015-16.

The remaining 60% of trains have failed to reach their break-even point and have instead incurred losses amounting to Rs1.75 billion, according to PR documents.



Currently, PR is operating 104 trains, of which only 42 express trains generate profits. These long-distance trains, mainly operating on the Main-Line One, generated around Rs17.45 billion out of total passenger train earnings of Rs20.39 billion for 2015-16.

The remaining 62 trains, which consist of mail-express trains, intercity and other passenger trains, have failed to add sufficient funds to the railways account. These trains in the last fiscal year earned Rs3.16 billion, however, their operating expenses or variable costs were recorded at around Rs4.91 billion, resulting in a loss of Rs1.75 billion.

Meanwhile, the consolidated earnings of the railways amounted to Rs35.97 billion, but its deficit continued to hover around Rs28 billion.

Pakistan Railways’ management struggles to turn around its fortunes as the company took a beating between 2008 and 2013. The management has reversed some major decisions related to the public-private partnership (PPP) signed in previous tenures and made new accords for such partnerships to commercially operate the passenger trains.

Although its first flagship train Green Line Express started in 2015, after gaining due popularity, the management refurbished more trains and started another three trains on the PPP mode and was consequently earning hefty revenues from the brand.

However, PR’s other passenger, mail-express and intercity trains are continuously burdening the balance sheet.

According to documents, PR’s 10 mail-express up/down trains including Khushhal Khattak Express, Bolan Express, Akbar Express, Fareed Express and Jaffar Express earned Rs2.24 billion, whereas their variable cost surpassed Rs3 billion, resulting in a contribution margin of negative Rs760 million.

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PR’s intercity trains, which are 24 in number, earned Rs681 million, whereas their costs came at Rs1.25 billion, resulting in a loss of around Rs569 million.

Similarly, PR’s 14 passenger trains incurred a loss of around Rs218 million. Passenger trains earned around Rs132 million, whereas their operational expense came to around Rs351 million.

Simultaneously, the PR incurred a loss of Rs49 million from Zahedan Express and Thar Express. Furthermore, it suffered a loss of Rs126 million and Rs22 million from six mixed trains and shuttle trains.

Published in The Express Tribune, November 2^nd, 2016.

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