The cash-strapped Pakistan Railways has managed to get Rs6.1 billion in loan through its profitable ancillary, the Pakistan Railways Advisory and Consultancy Services (PRACS).
The loan, provided by National Bank of Pakistan through a consortium, has been extended for a five-year period at an interest rate of 13%, and is expected to be transferred to the PRACS account this month.
PRACS will pay back the loan in 10 biannual installments, and has been provided guarantees by railways and the finance ministry since it is not possible for the ancillary to arrange for the biannual installments.
No written agreement has been signed yet, though.
Sources say interdepartmental negotiations between PRACS and railways for modalities of the loan’s utilisation have been finalised. The documentation with the bank is expected to be completed within a week.
Under the agreement, PRACS will rehabilitate about 96 locomotives with the loan and has already selected five retired and on-duty engineers for the job.
“I am hoping to start the rehabilitation process from mid-February. We have to put all 96 locomotives back on track within a year,” said PRACS Managing Director Junaid Quraishi while speaking to The Express Tribune.
We have already identified locomotives which have to be rehabilitated, and are waiting for the money to be transferred to our account, he said.
Quraishi said the loan request was placed before the PRACS board of directors, who approved and signed the summary for the loan.
“Our only concern is the written guarantee for the repayment of loan by railways,” Quraishi said.
“The finance ministry, however, has assured us about the repayment on time, but we are still waiting for the agreement to be signed, hopefully before the transfer of funds,” Quraishi added.
Published in The Express Tribune, January 18th, 2012.
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