The CDWP also cleared a Rs6.3b project for rehabilitation of 30 diesel locomotives. PHOTO: FILE
In a first step towards restructuring Pakistan Railways, the government approved a bailout package worth Rs25.7 billion for the crisis-hit entity. The funds will be used to repair the engines currently out of order in addition to buying 50 new diesel-electric locomotives.
Approval to the two projects given by the Central Development Working Party (CDWP) marks the beginning of restructuring the cash-strapped state-owned company that has been incurring losses for years due to aging and shortage of equipment, overstaffing and debt accumulation.
However, approval of these projects without a comprehensive restructuring plan puts a question mark over the prudent use of the taxpayers’ money.
The approval by the CDWP is a departure from the government’s previous stance on Railways. The Economic Coordination Committee had earlier refused to pick up debt liabilities worth $112 million of the national carrier. The Railways had obtained this loan for procurement of locomotives.
Headed by Minister for Planning, Development and Reforms Ahsan Iqbal, the CDWP meeting on Friday approved a project for procuring 50 diesel-electric locomotives, half of which will be engines with 3,000 horsepower and the other half of 2,000 horsepower.
The Railways wants to procure the locomotives to handle freight traffic including transportation of furnace oil across the country – a neglected area in the past, which also became one of the reasons behind the accumulation of losses by the company. Minister for Railways Khawaja Saad Rafique promised to turn the entity around by focusing more on the freight business.
The CDWP also cleared a Rs6.3 billion project for rehabilitation of as many as 30 diesel locomotives. By spending over Rs6 billion, the management of Pakistan Railways wants to extend the life of these locomotives by another 15 years, according to the planning ministry.
The previous government had opposed to give financial lifeline to Pakistan Railways, and instead first sought a comprehensive restructuring plan. One of the reasons for refusing the bailout package was that the then finance minister desired to procure new locomotives from General Electric of the United States, while the Railways wanted to strike a deal with a Chinese firm, according to sources in the finance ministry.
The other major reason for failing to revive the entity was tailor-made tenders for procurement of locomotives issued by Pakistan Railways. Every time they issued a tender, it became controversial.
For a $6.7 billion programme, Pakistan has assured the International Monetary Fund (IMF) that by March 2014 it will develop a comprehensive restructuring plan for Pakistan Railways and the company will be converted from a government-controlled department to a state-owned liability company.
However, experts have again questioned the government’s move of keeping the Railways a state-owned entity, which according to them, will not solve the problems. They said the government did not seem serious in resolving the problems of the entity and wanted to retain the workforce, hired under political compulsions in the past by successive governments.
In the previous regime, the Planning Commission had also proposed a plan to convert Railways into three separate companies, each one having its own business model. These companies had been proposed for separately running Railways’ commercial operations, to manage its properties and to deal with the affairs of national carrier’s workshops.
The CDWP also approved eight other projects having total value of Rs37 billion, including the Rs22.5-billion for Gomal Zam Dam and Rs11.6-billion Punjab Irrigation Project.
For Balochistan, Quetta flyover worth Rs3 billion was approved by the CDWP under the Quetta Development Project. Four small road projects for Balochistan with an estimated cost of Rs3.4 billion were also approved by the CDWP.
Published in The Express Tribune, September 8th, 2013.
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COMMENTS (14)
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Chinese maal is coming.............
@JSM. I agree with you. IF only the railways look at their past records, Diesel-Electric Engines from USA have always performed well with Pak Railways, and at times beyond their designed life.
The issue that I don't see getting addressed with this additional investment is that of overstaffing and high debt. It seems the decision makers are assuming that as Railways is fixed and more revenue comes in, the entity will be able to pay off debt as well as sustain its current workforce. In that case, they should at least try to re-finance the debt on more lenient terms and put a moratorium on further hirings to reduce financial bleeding of the entity.
@Lahori: "My country will bleed to the last drop…inept and corrupt will rule and govern…educated will wander helpless and then leave by land and the seas…bad times will turn worse…and my nation will pay the cost through their lives and souls. Now convert whatever I have said to present tense."
So, just imagine how the Mughals ruled their land when there were no new papers, phone, TV or internet.
Disgusting.
Additional billions stolen from the poor ...
One word of advise- only American (US) design diesel locomotives perform- all others including European diesels pack up. Indian Railways always ties up with American locomotive builders for purchase of diesel locomotives and technology.
Here you see the recent IMF payments goes to railways drain. Good going federal gov.
At the end of 5 years, Ahsan Iqbal and khawaja saad rafiq will be billionaires.
Pakistan should purchase or lease ten trains engine plus ten coaches a year for next ten years from India on cement barter system.
PML N is much better than PPP. I hope Railway will become a profitable institution again!
why am i paying for this junk called pak railways? outraged to see my taxes wasted for a broken old useless system that should have been long sold out ... no sooner than we begged on our knees to the IMF and secured some dollars, these rulers have once agained started to waste money down the drain .. privatise railways or sell it off.. same goes to steel mills, pia and other useless junks maintained only to assure corruption..
Rs. 25.7bn down the drain. I'd rather suggest them to spend this amount on innovation-where are the reforms??
This money too will be eaten up..............is this the best that this government can do ?
My country will bleed to the last drop...inept and corrupt will rule and govern...educated will wander helpless and then leave by land and the seas...bad times will turn worse...and my nation will pay the cost through their lives and souls. Now convert whatever I have said to present tense.