LAHORE: It’s a very happy new year for Pakistan Railways (PR), though not everyone shares the mirth.
The state-owned corporation has received a loan of Rs6.1 billion from a banking consortium through its ancillary, Pakistan Railways Advisory and Consultancy Services (PRACS). The management of PRACS, however, is planning to call a strike, as they think that PRACS does not have the resources to pay back the loan. Top officials fear that the step will default the profitable ancillary in no time.
PR has tried in vain to take a loan from various banks and financial institutions. No-one has been willing to back the failing organisation. PRACS, however, is a profit-earning ancillary of PR – thus it was decided by top PR officials to use the ancillary to take a loan.
PRACS was established in 1976 and is currently run by retired and on-duty PR officers. With a small team of 800 officers and workers, PRACS has been a profit-earning company, in marked contrast to PR. Most of these 800 officers and workers are working on a contract basis, which many feel is the reason for its greater efficiency.
As the National Bank of Pakistan has agreed to provide a Rs6.1 billion loan to PRACS, the PR management is now working out how to spend the money. The initial plan was to buy 40 new locomotives from China. Now the thinking is to use the loan to rehabilitate 96 locomotives currently lying off track.
The PRACS management fears that the rehabilitation of locomotives will open a new door for corruption, as no-one will know about the exact numbers of spare parts that will be purchased to fix the engines.
Khalid Bashir, assistant director PRACS, said that the loan installments will be around Rs110 million monthly, but PRACS earns only about Rs15 million per month. He said that, although Railways officials claimed the instalments would be paid by PR’s finance division, everyone knows what the financial condition of PR is. Bashir added that almost 90% of officials are worried about the future of PRACS – and are planning to protest.
PRACS Managing Director Junaid Quraishi said that it was due to the goodwill of PRACS that PR was getting loan. He said it would be his duty to make sure that the funds were used for the repair of locomotives and not for other purposes. PRACS will rehabilitate and make records of all the spares purchased, he added. Quraishi said that things are not finalised but PRACS would only accept the loan once PR signed an agreement agreeing to repay the loan on time. If PR refused to do this, the loan would never be accepted. “We have to make sure that the credibility of PRACS will not be spoiled due to the agreement,” Quraishi added.
Pakistan Railways has already received Rs4 billion from the Planning Commission, under the Public Sector Development Programme in December, which will also be spent on locomotives rehabilitation.
Published in The Express Tribune, January 3rd, 2012.
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