Weak business plan: PR deficit rose by Rs333.8b in 2011-20: AGP

The Auditor General of Pakistan (AGP) has revealed that the Pakistan Railways incurred operational losses to the tune of Rs333.812 billion in nine years (2011-20), saying that the mega public utility remained heavily burdened by its plethora of subsidiaries and a weak business plan.

The forensic report, sent to a subcommittee of the federal cabinet, said that though the railways’ revenue rose from Rs18.61 billion in 2011 to Rs47.59 billion in 2020, however, its expenses, which were Rs45.56 billion in 2011, jumped 115% to Rs94.74 billion in 2020.

During the nine-year period in the auditor general’s forensic report, the railways revenues rose by 155%, but its expenditure also increased by Rs55 billion, increasing the department’s deficit to Rs50.15 billion in 2020 from Rs25.93 billion nine years earlier. The government subsidies also rose Rs45 billion annually.

The report said that railway fares were increased 135 times in the last nine years. However, the number of passengers came down from 64.9 million to 44.3 million. It pointed out that the number of freight trains increased from 12 to 18, while passenger trains came down from 230 to 101.

“Except for the financial year 2018-19, the gross profit margin ratio remained negative during the 2011-20 period,” the report said, adding that the department relied on Rs39 billion loan from the State Bank of Pakistan and Rs199.44 billion funds from the Public Sector Development Programme.

The report pointed out that 1,331 train accidents occurred during the said period, which incurred Rs1.55 billion losses. Overall, train delays reached 339,579 hours due to operational mismanagement and malfunctioning infrastructure.

During the audit, the report said, incidents of unauthorised use of station revenue and robberies came to light. It said that there were cases of theft of valuable parts of rolling stock and track material, irregularities and frauds, which indicated a weak command and control system.

The forensic audit also revealed frauds and mismanagement of the railway lands and irregularities in procurement payments through fake invoices. It said that 4,741.08 acres of railways land had been encroached upon, while residential plots were illegally converted into commercial plots.

According to the report, all the subsidiaries of the railways failed to generate additional revenues. It said that 90% business of the subsidiaries depended upon the railways but they failed to achieve their objectives, putting a burden on the railways operations system.

The report mentioned that the railways ministry formed the Kashmir Railway (Pvt) Limited Company for Islamabad-Murree-Muzaffarabad rail link on June 3, 2014. However, the company was closed without any success after five-and-a-half years, which cost the department Rs67.945 million.

The signal upgradation project, which started at a cost of Rs5.16 billion to replace the outdated system between Lodhran and Shahdara suffered a nine-year delay, costing Rs7.626 billion. Similarly, the Khanewal-Raiwind double-track project was delayed for 10 years due to irregularities.

Excessive use of high speed diesel and sale of electricity at low rates also resulted in a loss of Rs317.05 million. Also because of lack of computerisation, the railways manufacturing units incurred a loss of Rs948.37 million.

The railways department owed Rs3.5 billion to five contractors under the private-public partnership for many years, the report said. In addition, the report added, the department owed Rs9.857 billion to various other entities because of irregularities in procurement.

The auditor general made 13 recommendations for the improvement of the railways department. They include transparency in public-private partnership agreements, reduction in labour and maintenance expenses, and improvement in workshops and manufacturing units.