Pakistan Railways (PR) has decided to go to the Supreme Court to challenge a Lahore High Court’s (LHC) verdict, saying the management of Pak-Business Express train service is continuously defaulting on agreed daily rent payments, which have crossed Rs1 billion.
Recently, the LHC ruled in favour of the business express management and directed the PR to settle the claim of Rs180 million, which they had paid to the railways as a security deposit before the venture kicked off.
“We will shortly approach the Supreme Court against the LHC’s decision as we believe Pak-Business Express owes over Rs1 billion to the Pakistan Railways,” said PR spokesperson Rauf Tahir, while talking to The Express Tribune.
The claims of both sides are linked with the daily rental, which initially was Rs3.1 million per day at 88% occupancy rate and later revised down to Rs2.2 million at 65% occupancy. This decision sparked a cold war between them which is still going on.
In 2011, an agreement was signed between the PR and Four Brothers, which runs the business train, which paved the way for a private company to run a train service. In February 2012, the operations were started, the first such venture for the PR which gained immense popularity primarily due to the deteriorating services of the state-owned enterprise.
However, the deal looked quite strange as out of every Rs100 earned, the PR would receive Rs88 while the business express would get only Rs12. From this small share, it had to manage the expenditures and make profits. Soon the business train operators realised that it would be tough to pay 88% or Rs3.1 million daily. They started pressing the PR authorities to revise downward the occupancy rate. In the meantime, they delayed daily payments which caused a standoff. Pak-Business Express succeeded in getting the occupancy rate reduced to 65% in 2013. However, their dues piled up to around Rs400 million.
From that point, the two sides hardened their stance. PR was calculating the daily rental at 88% occupancy whereas the business express was paying at 65% occupancy.
Now, the PR claims an outstanding amount of over Rs1 billion, whereas the business express operators have rejected the figure, saying they are not paying anything other than the daily rental.
Going a step further, they are claiming the security deposit of Rs220 million given to the PR for the rehabilitation of locomotives and coaches and building infrastructure.
“We have to receive Rs180 million from the railways as we have won the case; this vindicates our stance,” said Pak-Business Express Director Operations Mian Shafqat Ali while talking to The Express Tribune. “We are now paying the daily agreed amount at 65% occupancy, if the railways claim the dues have accumulated to Rs400 million, then they should file a case in court as we did,” Ali suggested.
Though the PR never accepted this venture wholeheartedly, but this has been profitable for them as they are receiving a fixed income of Rs2.2 million every day. So far, it has received more than Rs2.5 billion.
“Some officials have reservations about the deal but many others don’t want to lose the daily income during a period of tough financial situation for the corporation,” said a PR official. “It is expected that this war of words as well as partnership will continue in coming years,” the official added.
Published in The Express Tribune, December 12th, 2014.
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