Disagreements over payments: Pakistan Railways, Business Express in standoff

National carrier’s threat to cease private venture’s operation works as payments start flowing in.

LAHORE:

The cash-strapped Pakistan Railways seemed to rule out the favours of its only self-sustainable service – Pak Business Express – to operate the first ever business trains as it disallows on-time departure of services between Karachi and Lahore without receiving its daily pocket-money.

Business Express is liable to pay Rs3.1 million daily to PR for using the national carrier’s infrastructure and network for operating its train. The management of the Business Express seldom paid the agreed amount to railways on a daily basis due to lower-than optimum occupancy rate. The PR General Manager Operations Junaid Quarishi issued a notice to the privately-run service of forced discontinuation of Business Express’ operations until the transfer of the committed amount daily. Since the past week, the privately-run venture had started disbursing the relevant funds regularly before departure time. However, the outstanding dues of Rs322 million were still unpaid to PR.

“This is the step towards the right direction, by increasing pressure the railways was getting the agreed amount since past week,” said Zubair Shafeh Ghauri, director public relations PR while talking to The Express Tribune. “The day we do not receive the agreed amount, train will not depart,” he added.

He, however, clarified that the management of PR and Business Express were not thinking of shutting down the joint venture. We will only suspend operations in case the management fails to deposit the fixed amount, as soon as we get the payment, operations will resume, Ghauri said. “This is a joint venture and interests of both parties are associated with it,” he added.

On the other hand, the Business Express was witnessing falling occupancy ratios which might haunt them throughout the winter. The management was trying its best to revive the fixed-cost issue with railways as it was hard for them to pay this huge amount daily. “We have already dispatched our recommendations for lowering down the operational cost of the train to concerned Railway authorities,” said Ijaz Ahmad, CEO of Pak Business Express while talking to The Express Tribune. He, however, was reluctant to tell the figure in which they were interested. “We have to debate on this with Railways as we have to accommodate some favours which we give to Railways in advance,” Ahmad said. We were paying the agreed amount to PR and will try to pay the outstanding dues also once the issue was resolved, he added.

Pak Business Express also cut down its fares to attract passengers for the winter season, but the step went in vain as the occupancy rate still fluctuated between 50-55%. The management was able to secure some extra favours from a few PR executives since the inauguration, reason of such favouritism were the personal contacts of the management with government officials and the desire of national railways to keep this train on its tracks to left the door open for further public-private partnerships.

However, the current standoff suggests Railways had decided to get right down to business with the Busines Express to recover the total outstanding amount of Rs332 million.

“To write-off the outstanding dues and cut daily fixed-cost is not an easy task,” said Ghauri. How can the Railways negotiate with an entity whose track record with Railways was so poor, he asked. Firstly, Pak Business Express should clear its payment record and only then Railways will negotiate with them on these issues, Ghauri added.  

Published in The Express Tribune, October 25^th, 2012.