Cabinet meeting: PM saves Pakistan Railways from derailing

Gilani tells officials to charm finance ministry and share budget revision plans.

ISLAMABAD: Pakistan Railways became the first federal ministry to have its annual budget rewritten by Prime Minister Yousaf Raza Gilani and his cabinet within six months of its budget’s approval.

After dragging its feet, the Pakistan Peoples Party (PPP) government finally gave in to the demands of senior railways officials and agreed to pay Rs8.1 billion to repair the locomotives and coaches, which were burnt in Karachi and Sukkur divisions in the aftermath of former premier Benazir Bhutto’s assassination in 2007.

The demand was put across in the cabinet meeting on Wednesday. The officials also revealed that the Pakistan Railways had lost Rs10 billion since July 2010. They had also brought a new financial bailout package of Rs11.2 billion to the meeting and a demand to revise their annual estimated budget from Rs50 billion to Rs61.2.

The officials, giving a breakdown of the Rs11.2 billion bailout plan, said that Rs6.1 billion were required to rehabilitate locomotives, Rs2 billion each for deferred maintenance of tracks and coaches and Rs1 billion to create strategic oil reserves.

According to sources, Prime Minister Gilani only paid “lip-service” to the SOS calls sounded by the railways ministry and to their demand that Rs11 billion must be released immediately to avoid closure of more sections across Pakistan.

After a long presentation to cabinet members on the performance of railways, Gilani was said to have expressed empathy with the officials but told them to sit down with the finance minister and his team and convince them to raise their annual budget.

The railways ministry is the first federal government institution to have presented its revised annual budget before the cabinet. According to a copy of the briefing given to the cabinet, which is available with The Express Tribune, the cabinet members were told that all estimates from six months ago had turned out to be inaccurate as the ministry now required billions of rupees to run its operations. Further, when the budget was approved, the railways ministry was to receive a subsidy of Rs21.9 billion but it actually received Rs43.5 billion in government subsidies.

Cabinet members were told that when budget estimates were drawn up, railways was expected to generate revenue of Rs28.2 billion. The total budget was estimated at Rs50 billion, including a government subsidy of Rs21.9 billion. However, within six months, the railways had to revise its revenue estimate to Rs18 billion.

The officials said that the reason for the financial collapse was a constantly declining revenue stream, which was caused by several factors. A failure to secure supply of spare parts for Chinese locomotives was cited as one of them. Also, officials said, railways did not get the 75 new Chinese locomotives and tariff was not increased. They said that railways was yet to receive the amount to repair locomotives that were burnt in 2007 and the closure of three routes — Peshawar to Nowshera, Kot Addu to Multan and Shikarpur to Quetta — due to floods caused further revenue shortfall.

Gilani said that the restructuring plans of Pakistan Railways, Pakistan Steel Mills and Pakistan Electric Power Company (Pepco) should be presented in the next cabinet meeting. Gilani said that the plans for Pakistan International Airlines and the National Highway Authority be presented in the subsequent meeting.

(With additional input from APP)

Published in The Express Tribune, December 30^th, 2010.