ISLAMABAD: The net losses of the Pakistan Railways (PR) went up by seven per cent to Rs32.52 billion in 2013-14 from Rs30.5bn in the previous financial year, despite what has been claimed by government as a turnaround in its financial position.

This has been reported to the president and the parliament by the Auditor General of Pakistan (AGP) in annual report for 2014-15.

It noted that the PR also failed to achieve the target of ‘zero operating deficit’ and said the total operational working expenditure of Rs55.3bn was much higher than the gross earnings of Rs22.8bn. The expenses increased by Rs6.79bn, or 14pc, as compared to those of 2012-13. Resultantly, the operational losses increased to Rs32.52bn.

“This indicated that the Railways administration failed to achieve the target of zero operating deficit,” the AGP report said. The loss was covered with the amount provided by the federal government in the form of grant-in-aid.

The PR’s long-term liabilities went up by 1.87pc to Rs74.12bn from Rs72.7bn in 2012-13.

The PR’s capital and net worth increased by Rs22bn, or 34pc, over the preceding year. But the increase was due to investment by the federal government through cash released for development programmes.

Its deferred assets increased by Rs13.8bn, or 27pc, but this was because of wrong booking of the government investment on replacement account and same under the head ‘deferred assets’, the report said.

The report said the PR suffered a loss of Rs566 million due to a wrong decision of the Economic Coordination Committee of the Cabinet under which the Business Train was contracted out to a private party. This party did not pay its dues and the railways ministry did not submit a fresh summary for recovery of money as repeatedly requested by the PR management.

The PR’s computerised reservation system did not cover all types of ticketing, said the report. This created problems when it came to generating accounting and statistical data about passenger traffic, said the report.

The e-ticketing facility was introduced in November 2007 and remained operational only for three months, but its cost and benefit analysis was never made.

The AGP also reported non-existence of system documentation, operations manual and training manual which caused multiple problems that led to increase in downtime.

The report said the PR was deducting general provident fund on a regular basis from the salary of its employees as shown for the year-end at Rs6.145bn. During the audit of record, it was noted that the said amount was not kept separately even though doing so was a mandatory statutory requirement.

The amount had been utilised for the past many years due to financial crunch faced by the PR and in practice nothing was available under the GPF head. “Due to that, PR was unable to pay off its liability of GPF as and when demanded by the employees.”

The report noted that overdraft would have been much higher if this amount was kept separate from the consolidated fund. “Resultantly, overdraft remained understated.”

This meant the public money was being used by the Railways for operational purposes, which was a clear violation of the rule specified for such accounts.

It said the PR was buying electricity from Wapda at higher rates and selling it to its employees living in residential colonies at cheaper rates, creating cash flow problems. There was a need for separate domestic connections for the colonies, the report said.

Published in Dawn, July 2nd, 2015

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