There can be no recovery without revival of railways

A revived rail network with its freight train can help Pakistan cut trade deficit considerably.

KARACHI:

We have entered the nuclear age. Man is exploring space and for the first time, man-made exploratory probes have gone out of our solar system into what we call interstellar space. It is without a doubt a technology-driven world that we live in today. But even with all of this advancement, the cheapest mode of heavy transport across land is still something that was invented over a century ago, the railroad.

And it is even more so for a developing country like Pakistan. There can be no economic revival in Pakistan that does not include the revival of the railroad as a key component.

First let us understand why this this revival is so important and then we will look at the potential benefits of this.



We have already established that one of the key drags on the economy is the extremely high import bill. We have also established that a significant portion of this is oil imports. Going into it deeper we see that 55% of the oil import bill is high speed diesel (HSD). This is so because its primary target market is freight transport by road which accounts for 90% of the total freight carried across Pakistan.

It is an irony that one of the few positives left behind by the British Raj in the sub-continent was the world’s largest network of railway tracks and we have failed to utilise that.

One of the advantages of the railroad is its fuel efficiency. It consumes about 66% of the fuel per kilometre compared to the same freight moved by road transport. In other words if we can manage to shift the bulk of Pakistan freight transport to railways, we can reduce the diesel import bill by a third. Subsequently, this would result in a fall of about 15% in the overall oil import bill.

This will have a trigger effect that will include a fall in the demand for foreign exchange, a fall in the drain on forex reserves to fuel the oil import bill and eventually a reduction in the need for loans to fuel the widening dollar and rupee gap. This will reflect both on foreign and domestic borrowing. And this, in turn will shave off a significant chunk of debt servicing which is another drain on finances.

White elephant

It is a common argument that Pakistan Railways cannot be revived because it is too far gone and corruption and mismanagement is too deeply entrenched. There is nothing that cannot be revived if the political will and the right planning are present. There is no reason why, with the right road-map, railways cannot one again become a viable economic entity.

The report penned by Kaiser Bengali makes a very valid point that Railways has not suffered because of corruption, rather corruption has festered because of neglect.

There was a time that Pakistan Railways was a profit making enterprise and carried the bulk of Pakistan’s freight traffic. This is the norm, the world over where railroads have freight carriage as their primary source of income, not passengers.

This was until the 1970s, but since then, following the deregulation of the road sector and creation of the National Logistic Cell and gradually freight cargo started shifting to the roads, leaving Pakistan Railroad to focus more and more on passenger services.

How can one expect PR to have competed? It had to finance the construction of railroad tracks whereas the NLC and other road transport companies did not have to spend a penny to build roads or maintain
them. This was a grossly uneven playing field. The government builds roads out of the PSDP.

It is key that the freight business be once again made the mainstay of the railroad sector. That is the first step and has to be part of any plan to revive railways. It is good to know that the PML-N government seems to be focusing on just this.

Published in The Express Tribune, September 16^th,  2013.

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