ISLAMABAD: The government plans to set up another entity named ‘Mainline-1 Authority’ for smooth implementation of $6.8bn China-funded Karachi to Peshawar rail track besides offering voluntary separation scheme (VSS) to the employees of Pakistan International Airlines (PIA).

This is part of institutional reforms for restructuring and strengthening of key institutions of economic governance of Dr Ishrat Husain, the prime minister’s adviser on austerity and institutional reforms.

The Executive Committee of the National Economic Council (Ecnec) led by Dr Abdul Hafeez Shaikh, the prime minister’s adviser on finance and revenue, is expected to approve on Wednesday (today) the upgradation and improvement of 1,733km Mainline-1 (ML-1). On completion, the project is expected to double the speed to 160km and 140km per hour of passenger and cargo trains, respectively.

The prime minister has approved the restructuring plan of Pakistan Railways under which the Railway Holding Company on the pattern of Pakistan Electric Power Company as umbrella organisation, besides Freight Traffic Management Company, Passenger Traffic Management Company and Infrastructure Management Company would be carved out.

Authority to implement $6.8bn Karachi-Peshawar rail track

Also, a totally separate ML-1 Authority will also be established for dedicated and focused coordination with the Chinese side. This restructuring exercise will be completed within four months. It will now be the second independent authority to deal with the Chinese investments after the creation of China-Pakistan Economic Corridor Authority (CPEC-A) for which a draft law is under debate for introduction in the National Assembly to provide it legal cover. An ordinance on the CPEC-A had expired a couple of months ago.

Moreover, the selection process for new chief executive officer of Pakistan Railways has been started and would be completed in two months while the railways board is being revitalised through induction of members from the private sector and the railway headquarters is being strengthened through induction of four market experts in management pay scales.

The government has also decided to outsource 15 passenger and two freight trains and public-private partnership (PPP) projects would be launched shortly for development and management of railways land and stations.

In June this year, the Central Development Working Party had recommended the project cost at $7.2bn and referred it to Ecnec for formal approval.

The Planning Commission on Tuesday, however, said the estimated cost referred to Ecnec for approval was $6.8bn. This is because of culmination of railway line to Peshawar instead of earlier target of Torkham while the Karachi-Hyderabad section will be built on commercial lines under the PPP mode. ML-1 is a high priority project of Pakistan government irrespective of the political divide.

The project remained under debate because of its huge financial impact, the US opposition to Chinese investments in Pakistan and the limitations of the government of Pakistan under the debt sustainability perspective of the International Monetary Fund. Pakistan Railways had worked out the project cost at $9.2bn which was scaled down by the Planning Commission and the Ministry of Communications through a series of cost cutting measures. The two governments would now finalise the financial arrangements after Ecnec formally approves the project on Wednesday.

The PIA’s restructuring plan has been finalised under which a Strategic Business Plan would be approved by the Economic Coordination Committee (ECC) of the Cabinet within the current month. A Human Resource Rationalisation Plan will also be brought before the ECC for approval within the current month before offering VSS to PIA employees.

Separately, a committee led by finance secretary Naveed Kamran Baloch has been assigned to finalise within this month financial restructuring of PIA’s Balance Sheet which is overloaded with government guarantees and local and international loans and liabilities. On top of that, non-core functions of the airline would be completely separated by December 2020.

The federal government has already decided to retain 324 out of 441 organisational entities. Of the remaining, 10 entities are being transferred to the provinces and relevant divisions while nine entities have been notified for wind up or liquidation and 17 others being merged.

A total of 43 entities would be privatised or transferred to Sarmaya-i-Pakistan and an implementation committee of the cabinet is overseeing the process on a weekly basis.

Published in Dawn, August 5th, 2020