Railways suffers loss of Rs45b in 2018-19

PR is not moving on a sustainable financial path: AGP

ISLAMABAD:

The Auditor General of Pakistan (AGP) has worked out a loss amounting to Rs45.5 billion during the current audit of the Pakistan Railways (PR) and its ancillary companies.

The supreme audit institution of the country has noted that the PR has no competitor in the country for its railroad services and yet its net loss for the year 2018-19 stands at Rs32.7 billion.

In its report, the AGP said the profit and loss account of the PR for the fiscal year 201819 indicated that the total operational working expenses amounting to Rs86.4 billion were much higher than the gross earnings of Rs54.5 billion.

The AGP noted that during the year 2018-19, around 140 major and minor accidents occurred in which 39 people died and 74 sustained injuries. It said these accidents “shook the trust of the general public with regard to safety of train operation.”

Moreover, the loss on account of these train accidents was not given adequate disclosure in the financial statement of the PR.

The report said the PR’s gross earnings had increased as compared to previous years but still the gap between working expenses and gross earnings was quite high which resulted in operational loss of Rs31.9 billion. “This indicated that railway administration could not achieve the target of zero operating at deficit.”

The PR management paid an Interest on overdraft and foreign loans amounting to Rs796.4 million. This represents a sharp increase of 16.55% over the previous year.

“The PR suffered a net loss of Rs32,769.28 million,” the report said, adding that to cover the loss, the government provided grant-in-aid amounting to Rs 37 billion which was in excess of the operational loss.

It said the PR has no competitor in the country and road transportation is often opted by the general public due to nonavailability of desired coaching, freight facilities, train punctuality and safety.

“The National Transport Policy of Pakistan does not complement rail and road transport,” it said, adding that it has been found that the PR has not been prioritized by the government owing to which less allocation of resources have been made to it under the PSDP as compared to road networks.

The report said the PR remained the primary mode of transportation in the country till late sixties.

However, as the roads flourished and emerged as a quicker mode of transportation, the government focused more on expansion of the road network to achieve overall economic growth.

“Resultantly, the railways’ share of inland traffic reduced from 41% to 10% for passenger traffic and 73% to 4% for freight traffic,” the AGP report noted.

In order to strengthen the sector, the government of Pakistan made the PR a part of the Vision 2025 in May 2014 for upgrading the railways’ system.

It included an increase in existing speed, doubling the track of mainline sections, installation of a modern signaling system, establishing linkage to other neighboring countries and development of separate freight corridors on railway track.

The achievement of these visionary objectives by the PR was reliant on a practicable roadmap under the strategic planning.

However, the AGP said, “It was found that a Strategic Plan of the Pakistan Railways drafted in 2015 remained un-finalized and unapproved even after a lapse of four years.”

The AGP observed that there was non-recovery of Rs6,528 million of the PR receivables, encroachment of railway land valuing Rs4,474.7 million, procurement of defective material worth Rs1,889.8 million, cases of non-finalization of fraud and serious irregularities amounting to Rs1,075.2 million and irregular award of contracts amounting to Rs735.4 million in violation of Public Procurement Rules.