Pakistan Railways (PR), grappling with major financial setbacks totalling over Rs55 billion in the last fiscal year (FY23) has asked the federal government for an operational budget exceeding Rs1.10 trillion for the upcoming financial year 2024-25.
The budgetary request stands at a staggering surplus compared to the approved budget for the ongoing financial year 2023-24, with a difference of Rs36.98 billion.
PR management has presented comprehensive budget proposals to the Ministry of Railways, outlining allocations for various expenditures crucial for the efficient functioning of the railway network.
The proposed budget entails Rs45.19 billion earmarked for employee salaries and allowances, Rs10.85 billion for infrastructure development, and Rs11.67 billion designated for the maintenance of rolling stock.
Furthermore, an allocation of Rs42.88 billion has been solicited for operational expenses vital for sustaining railway operations.
It is pertinent to note that an audit conducted by the Auditor General of Pakistan (AGP) last year identified governance deficiencies, financial mismanagement, and transparency issues as primary factors contributing to PR's financial woes.
The audit underscored governance lapses, particularly in the administration and the management of Public Sector Development Programme (PSDP) projects, surpassing concerns related to risk management and controls.
A glaring omission revealed in the audit was the non-recording of accrued liability on account of interest and exchange risk premium on foreign loans, amounting to Rs29.35 billion.
In addition, a potential revenue loss of Rs19.80 billion due to project delays and non-adjustment of suspense balances worth Rs12.64 billion further exacerbated financial strain.
The audit report also disclosed an overspend of Rs11.75 billion beyond the allocated budget, exacerbating financial woes.
Moreover, the failure to account for accrued pension liabilities in PR's financial statements incurred an additional loss of Rs8.25 billion.
Contract awards at inflated rates incurred a loss of Rs6.96 billion, while the non-registration of Pakistan Railways Freight Transportation Company (PRFTC) with the Punjab Revenue Authority resulted in a loss of Rs7.92 billion.
Non-operating track access agreements led to an annual loss of Rs6.10 billion, and procurement lacking fair competition and transparency cost the department Rs5.09 billion.
For the current fiscal year 2023-24, the revenue target for Pakistan Railways has been set at Rs80 billion, higher by Rs10 billion over the previous fiscal year’s target of Rs70 billion.
In FY23, it earned Rs62.5 billion, falling short of the target by Rs7.5 billion. However, this year, the management stressed that, with the ongoing pace of revenue generation, they expected to achieve the Rs80 billion goal at least a month before the end of the fiscal year in June 2024.
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