Rail losses

Pakistan Railways is horrendously inefficient, runs an operating loss of close to Rs40 billion a year.

Three years after the terrible day in December 2007 when the country burst aflame at the news of Benazir Bhutto’s assassination, Pakistan Railways appears to have been unable to clean up the ashes. Of the 87 locomotives destroyed in the conflagration that followed, only three have been made serviceable again. This does not bode well for a country that once boasted a reasonably well-run railway network and that is in desperate need of a massive upgrade of its transportation network.

But the company is horrendously inefficient and runs an operating loss of close to Rs40 billion a year. Yet it is not without potential. Over 55 million Pakistanis use the railway every year and the network handles a substantial proportion of domestic cargo, including most shipments of oil to refineries. The government, however, seems incapable of running the company properly or even privatising it.

For instance, the plan for the restricting and privatisation of Pakistan Railways has been handed over not to the Privatisation Commission but to the State Bank of Pakistan (SBP). By no stretch of the imagination is it the mandate of the central bank of a country to formulate privatisation strategies of state-owned assets. The SBP should turn down a task for which it is not equipped and does not have the mandate for. For its part, the administration would do well to pay more attention to the woes of the railways, lest the losses mount up to the point where it is forced to sell the company for a fire-sale price. Over the past several years, the government — regardless of which administration was in office — has proven itself incapable of running businesses. It should heed the advice of Senator Waqar Ahmed Khan and get out of the business of running commercial enterprises, focusing its efforts on regulating commerce in the country instead. The country would be better served by having robust private enterprises regulated by a robust government.

Published in The Express Tribune, January 10^th, 2011.