Pakistan Railways: Management of three more trains to be privatised

Ticketing and sales to be auctioned to private companies.

KARACHI: Pakistan Railways has decided to hand over the commercial management of three more railway lines to private companies and expects to initiate the bidding process on them within the next few weeks, sources told Express News.

The move comes on the heels of two similar agreements that have been signed – but have not yet come into effect – with private companies. In all five cases, the Railways will be handing over ticketing, sales and marketing over to a private company in exchange for a fixed amount in revenues.

The three lines in question are the Allama Iqbal Express (which runs from Sialkot to Karachi via Lahore), the Fareed Express (which runs from Karachi to Lahore) and the Millat Express (which runs from Sargodha to Karachi via Faisalabad).

Railways spokesperson Abdul Hamed Raazi confirmed that the decision to privatise the commercial management of the three routes had been made by the Pakistan Railways management. He emphasised however that no decisions had yet been made on how much the Railways expected in revenues from the private companies or how long the bidding process would take.

The national carrier had earlier handed over the ticketing of the Business Express – which runs from Karachi to Lahore – a Lahore based company called Four Brothers, which will pay Pakistan Railways over Rs1 billion a year in exchange for the right to set ticket prices and collect revenues from ticket sales. The arrangement will go into effect on December 25. The railways will retain operational control of the trains.

Raazi pointed out that the arrangement allows for ticket price increases only if the private companies add value to the trains, such as adding amenities like televisions, etc or improving the maintenance of the train itself.

The ticketing and marketing of another train, the Shalimar Express, which also runs from Karachi to Lahore, has also been handed over to a private company. The financial woes of the railways have been making headlines across the country over the last few days as the national carrier failed to meet its pension obligations for several months in a row. One of the core financial problems of the company have been its inability to raise revenues in accordance with its expenses. The company had an operating loss of Rs15 billion in 2010, the latest year for which financial statements are available.

The privatisation of ticketing and sales appears to be part of the government’s attempts to raise revenues and ticketing without undertaking the politically tricky task of relinquishing fill control of the ailing national carrier.

“We are trying to involve the private sector in a public-private partnership,” said Raazi.

Pakistan Railways earned about Rs21.9 billion in revenues in 2010, but had expenses of Rs29.6 billion. At least Rs6.3 billion of that were pension expenses.

Published in The Express Tribune, November 5^th,  2011.