OLMT losses keep accumulating in Punjab

Project cost, subsidy, deficit surpass projected estimates

LAHORE:

The Orange Line Metro Train (OLMT) has become a source of financial loss for the province instead of benefiting the Punjab government.

According to sources, several transport projects of the province are being neglected because of the burden of the subsidy of billions of rupees being spent on the Orange Line train service.

The OLMT has faced a Rs900 million loss in the past four months. Only a fraction of the capacity of passengers was utilised, resulting in a daily deficit in the earning of Rs7.1 million.

The project is not only causing a heavy loss to the provincial exchequer, but also exposing the performance of the planners of the project. The planners had estimated 250,000 passengers travelling daily in the train as per the feasibility study.

Based on the estimate, the cost, subsidy and revenue were estimated, but none of them proved correct.

The cost of the project proved to be billions of rupees more than the estimate.

About 71% less passengers are travelling on the train daily than what had been shared in the feasibility plan, which is adding to the deficit.

Read More: OLMT’s revenue shortfall soars

As per official documents, about 9.1 million passengers travelled in the train in the past 126 days, who paid a total of Rs363 million fare. As per the feasibility plan, nearly 31.5 million passengers should have traveled during the time, which could have helped the Punjab Mass Transit Authority generate Rs1.26 billion. The Orange Line train faced a deficit of Rs896 million in fare. While 250,000 passengers were expected to travel by OLMT daily, only 72,218 people are using the service per day on average, which is 177,782 less than the estimated figure.

Instead of generating revenue of Rs10 million daily, merely Rs2.89 million was collected and the train service bears a loss of Rs7.1 million daily.

The monthly deficit in fare stands at Rs213 million.

As per official documents, a total of 9,099,568 passengers travelled on OLMT between October 25, 2020 and February 28 and Rs363,982,720 worth of fare was collected. From October 25 to 31, 529,680 passengers travelled in OLMT, followed by 2,060,062 in November, 2,155,036 in December, 2,261,116 in January and 2,093,474 in February.

Speaking to The Express Tribune, Punjab Transport Minister Muhammad Jahanzaib Khichi said the authorities were deliberating on various options to reduce the OLMT losses.

"We are making efforts to turn it into a project that can be run on a lower subsidy at the earliest and is able to continue operation without subsidy in the next phase."

However, an economist, Dr Qais Aslam, said the present operational model of the OLMT was bound to fail. He said that such projects could were not managed through income generated by issuing tickets. The yearly subsidy of billions of rupees is a burden on the provincial exchequer, which would gradually keep mounting.

He opined that the project wasn’t needed but the previous government had invested heavily in it, so it was impossible to shut it down. Therefore, the present government had decided to run it after completion.

The expert said the bureaucracy could not run the project. If the heavy subsidy continues to be paid through government employees, it will suffer the same fate as the Steel Mills, PIA and utility stores.

Dr Aslam said that if the government wanted to run the OLMT without subsidy, it would have to consider alternative sources of income for which the project should either be outsourced or run under public-private partnership, while advertisements along the track and at stations could be one of the possible means of revenue.

He said the Punjab Mass Transit Authority (PMTA) should be handed over to a board of experienced professionals from various sectors.

 

 

Published in The Express Tribune, March 8^th, 2021.