The railways had obtained the loan from China’s Export-Import Bank for procurement. PHOTO: FILE
The government on Thursday turned down a request of Pakistan Railways that the state bear the burden of $112 million (about Rs11.5 billion) worth of debt liabilities that the sinking enterprise owes to China, which is feared to worsen the financial condition of the corporation.
Federal Railways Minister Khawaja Saad Rafique asked the Economic Coordination Committee (ECC) of the cabinet, in a meeting held on Thursday, to take on the $112 million debt as the railways was not able to service it, officials say. The railways had obtained the loan from China’s Export-Import Bank for procurement.
However, the government refused to bail out the railways. On the contrary, it approved a Rs7 billion life line for Pakistan International Airlines last week.
The railways wanted its debt to be made part of the national debt aimed at cleaning its books. However, ECC Chairman Ishaq Dar, who is also the finance minister, rejected the request, arguing that after Pakistan Railways other entities would also start seeking similar treatment.
The country’s total public debt has already crossed Rs14.5 trillion or 63.5% of gross domestic product, far above the ceiling of 60%.
Pakistan Railways is facing acute financial problems and is unable to pay salaries and pensions to its employees without seeking grants from the government. Last week, the government gave a grant of Rs500 million to the railways for repairing out-of-order locomotives.
Registering NGOs
In the meeting, the ECC also constituted a committee to streamline the process of registering international and domestic non-governmental organisations.
The committee, to be headed by Science and Technology Minister Zahid Hamid, will submit its report to the ECC in two months and suggest how to check the rapid growth of INGOs and NGOs in the country.
According to a report of the Abbottabad Commission, there was no foolproof mechanism for registering INGOs and NGOs and their monitoring, posing a serious security threat to the country. Most of the NGOs are directly taking funds from international donors like the USAID and their aim is not known to state institutions.
The commission has called for strict security mechanisms to be put in place as most of these NGOs have become a tool for foreign spying.
Some of the organisations that are working to eradicate poverty in the country like the Pakistan Poverty Alleviation Fund (PPAF) have been accused of corrupt practices and found misusing borrowed money. The PPAF is allegedly spending the World Bank loan on its executives, according to a draft audit report.
LNG terminals
The ECC also approved three different projects for the construction of terminals for import of liquefied natural gas (LNG), according to an official handout.
It allowed the establishment of Engro Terminal, which will likely be completed in eight months at an estimated cost of $30-40 million and having a capacity of 200 million cubic feet per day (mmcfd).
However, modalities of the project have to be finalised by the finance and petroleum secretaries.
The ECC also reaffirmed its earlier approval for the SSGC LPG Retrofit Project estimated to cost $175-200 million with a capacity of 500 mmcfd.
It agreed to initiate the process of launching a new LNG terminal project at an estimated cost of $200-250 million with handling capacity of 500 to 1,000 mmcfd. Both the projects will be completed in two to three years.
The ECC approved such important projects without a thorough debate and in less than five minutes, according to the officials who attended the meeting.
The ECC did not extend the expiry date for quotas of those traders who had not been able to export sugar within the stipulated period. These quotas will now be awarded on first-come-first-served basis to the applicants who will establish irrevocable letter of credit with a shipment date within 60 days.
Published in The Express Tribune, July 19th, 2013.
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COMMENTS (21)
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@Ishrat salim: . Hand over PR to Mr lalloo Prasad…..who made Indian Railways profitable when none could do it in India…..his mantra has become a subject of study in many American Universities. . I have an even better suggestion i.e. Pakistan should ask Laloo Prasad to migrate to Pakistan . Over 1.2 Billion Indians will thank Pakistan and Pakistanis! . Cheers
@Babloo: Hand over PR to Mr lalloo Prasad.....who made Indian Railways profitable when none could do it in India.....his mantra has become a subject of study in many American Universities.
@VINOD: Because the loan was from a Chinese bank (EXIM) for procurement of equipment and was in USD, so it's stated in that b/c it'll be paid back in USD too.
@hasan: . so these shrewd chinese who now literally owns the railways, will now start calling shots.. another strategic asset sold to these chinese who slowly is eating up all our resources and taking control of it… Even a kid knows, that if you owe me money, you are the beggar and you will have to do what I ask you to do… now things are clear why these chinese companies keep getting contracts even after supplying junk.. . Pakistan does not have "Hard Cash" and as such needs to purchase Railway Locomotives and other Rolling Stock on Credit. . Being Pakistan's Higher than Himalayas, Deeper than the Pacific, Time Tested Friend China provides Loans to Pakistani Companies for the Purchase of Chinese Equipment. . I am sure that China will extend these Loans as also provide many more Loans to Pakistan so that Pakistani Companies-Organizations can buy Chinese Origin Goods. . Cheers
What a waste, railways is treated as the arteries of a country. Is airline travel more accessible to a common man than a railway. Really sad and depressing. Rab rakha
Nation wasted 600 billions on these sick corporations, we must take action and tell these corporations to make money or reduce expenses. This situation would not change without strict action and deadlines, if they cant work they must go home.
"The government on Thursday turned down a request of Pakistan Railways that the state bear the burden of $112 million" I always wonder that why in Pakistan all the losses / gains and various other denominations are indicated in DOLLARS. Similarly why millions and trillions are used for amount where as it is natural in subcontinent to express as Rupees and also in terms of HAZAR, LAKH, CRORE, ARAB, KHARAB etc. Will it not be easy for the common man to understand the terms which we have been using from hundreds of years . Over and above then why keep shouting we hate Americans and their culture???????
If the poor dont have bread let them eat cake +++++++++++++++++++++++++++++++++++++ And if the poor are unable to travel by PR let them fly by PIA.
@justforcarp: Based on your suggestion we re increasing salaries of the army by ten perecent. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Just cut the bloated salaries of the army (who never win any wars they start) by ten percent and you will have enough money to bailout railways, PIA and the steel mills (that may also result in change of Government but that is another matter)
so these shrewd chinese who now literally owns the railways, will now start calling shots.. another strategic asset sold to these chinese who slowly is eating up all our resources and taking control of it... Even a kid knows, that if you owe me money, you are the beggar and you will have to do what I ask you to do... now things are clear why these chinese companies keep getting contracts even after supplying junk..
Even if "we" do, that doesn't make it any of "your" (Indian) concern. I couldn't care less who runs the railway in India.
On another note, railways are a natural monopoly (there are a few basic kinds of monopolies) - it therefore doesn't make sense to privatise them as that company which inherits the railway will have THE ONLY railways and can therefore charge exorbitant rates as it faces no competition. Best is for government to sell a minority stake to private companies. Complete privatisation in an industry which is a natural monopoly - absurd!
Pakistan Railways and PIA should be merged so that all Ministers can have a joy ride in Pakistan Railway too same as they are doing on PIA, this might help them to reconsider to bail out Pakistan Railways.
Pakistan Railways, PIA, Steel Mills etc. etc. are all facing the same problems. The Government should start thinking of giving up all these Businesses and stick to more important issues such as Health, Education, Law and Order situation and above all Corruption in government owned Organizations. Since 1947 Pakistan is still the same, nation is been deprived of clean water, good health facilities, Gas and Electricity and now security. There is no point in having a democratic Government when no one is bothered about solving the problems of common man, giving all the necessary amenities of life. The Common man is facing hardships and trying to migrate in any part of the world where they can have peace of mind and willing to work 18 hours a day to have better standards of living, self-respect and sense of security. The one and only solution which the present Government has to sell off all Government owned Companies to Private sector and start repaying loans to IMF, World Bank and invest money in Energy sector, Health facilities, Education and Employment for youth. Our Youth is our future and if we want to build stronger Pakistan than we have to give them opportunities to proof their potentials in all arenas of life. So stop wasting time and do something which would be beneficial to the citizens of Pakistan.
Who is going to buy PR with $112M debt? PR should hire transport consultants from EU or US to revive thi entity.
How can they bailout the railways? NLC has to be kept happy as well.
" The railways had obtained the loan from China’s Export-Import Bank for procurement." +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ This is already a loan to the Pakistan nation as the Railways are 100 % owned by the Pakistani Govt. Any default will be held against the Govt. and will adversly impact further loans eg for Power Plants and the famous Corridor.
Didn't you know Ishaq Dar and other parliamentarians travel in PIA, not Pakistan Railways. So which one will be more important to them?
p.s. the real solution is privatization of both. It is not the government's job to run an airline or railway nor is it the railways or airline's job to employ thousands of workers of the ruling party unnecessarily.
Hand over Pakistan Railways to the Chinese. Just like Gwadar. Make all your problems, Chinese problems. Problem solved.
There is no other way but to privatize them. Until then these dramas would continue.
shlould have bailed out railways and let pia sink. former is way more important.