LAHORE: The Pakistan Railways (PR) looks to be in dire straits financially as its passenger and freight train affairs are being run with just three-day oil reserves that must be for one month at least.

A couple of days back the oil stock was only for one day, forcing the railways to limit its freight operations.

On the other hand, various assets of the railways, including the rolling stock, locomotive and the infrastructure, continue to be underutilised due to inefficiency, negligence and lack of will and decision making allegedly on the part of senior officials. Political instability and unrest triggered by the political parties and other stakeholders are adding fuel to fire.

“A couple of days ago, the railways was left with only one-day oil stock across the country. This forced the authorities to reduce the freight train operations, especially from Karachi and Lahore. It has never happened in the history of the PR. I think the railways will default if the government continues ignoring the department,” a senior official source warned while talking to Dawn on Sunday.

Runs with only three-day oil reserves instead of one month; dept unable to pay salaries, pensions on time

The official said the financial condition of the department has almost reached its collapse as it has no money to clear around Rs25bn liabilities as gratuity for a number of officials/officers who retired within last one year or so. Similarly, he revealed, the department is not even able to clear the monthly salaries of the employees and pension of the retired officials.

Those supposed to receive salaries and pensions on the first date of every month are getting salaries after a gap of 15 to 20 days. Recently, the train drivers decided to stop the trains and hold protests/strikes across the country as they didn’t receive salary even on Dec 20. Later on, they called off the strike after they were paid their salaries in two installments.

“You can now imagine the PR’s situation well,” the official added.

According to him, the department’s financial health was better in 2017-18 fiscal year and before as its annual freight revenue had reached a figure of Rs20bn per annum, including the earning from dedicated coal operation from Karachi to Yousafwala (Sahiwal). However, it started dropping gradually later and now it has shrunk to Rs16bn approximately, including the earning from the Karachi-Sahiwal coal transportation operation, which has been reduced due to import of coal from Afghanistan.

“The freight target was Rs20bn for the fiscal year 2022-23. From July to November (2022-23 Fiscal Year), the target was Rs10.2bn but it remained in the negative growth (-35), earning Rs6.6bn alone,” he said, wondering why it happened.

The official said the situation of passenger train operation, ranging between Rs20 to Rs25bn approximately, is also declining despite the arrival of the new coaches from China. Moreover, he added, the recent floods in Sindh and Balochistan also affected the operations, bringing the revenue down.

On the other hand, due to underutilisation of the rolling stock, locomotive and the infrastructure, the PR has miserably failed to generate and increase revenue to overcome the financial crunch and it seeks financial help from the federal government in a bid to meet its increasing expenses. Under the policy, the PR is required to invite and engage the private sector in its operation, especially freight operations. But in the last few years, it failed to do so for the reasons best known to the authorities concerned.

It merits mention that in 2021, the railways chalked out a plan to outsource its rolling stock (freight wagons) to the private sector.

In this regard, the department floated tenders in which 13 companies participated and pledged to take the freight revenue up to Rs13bn, excluding coal/freight operation, in one year and Rs35bn in five years.

But those supposed to shortlist the private companies for utilising the rolling stock, track etc only selected three companies and awarded them the contract to run wagons under phase one of the PR project to outsource its freight business.

Later, after a couple of months, these companies, which didn’t even sign contracts despite submission of the performance guarantee worth millions of rupees, started using hundreds of wagons/rolling for transportation of imported coal from Karachi to various destinations. Finally, they left the contract due to some issues.

The official said the plan was for gradual outsourcing of the PR’s 12,000 wagons. Under phase one, some of the bidders (total 13) together offered Rs13bn per annum for running these wagons but the PR unfairly awarded the project to some others. These firms continued running around 300 wagons (Karachi to Daud Khel and Jia Bagga) without signing the agreement.

“Had the PR accepted Rs13bn guaranteed offer from the companies of good repute it rejected, it would have not seen such a bad situation,” the official maintained. He said the process to increase and take the freight revenue to Rs35bn had been initiated in a bid to bring down the losses and turn the state-run organisation into a profit-earning entity. But unfortunately, it was not done that led to deterioration of the PR’s financial condition further. He said due to non-serious attitude, the department had reached the verge of destruction.

“Squeezing of oil reserves for train operation from one month to a couple of days clearly shows that the PR’s financial situation is really in great trouble,” the official said, requesting Minister for Railways Khawaja Saad Rafique to pay attention towards the crucial issues and resolve them on priority.

“He (the minister) should also launch an inquiry into freight wagons’ bidding affairs that discourage the private sector. In recent tenders of outsourcing wagons and constructing freight terminals under public-private partnership mode, the decisions are yet to be taken despite a passage of four months or so,” he pointed out.

To a question, the official said the PR’s share in freight business of the country was just over 4pc, which must be taken to 25pc. “The figure has been squeezed to just 2pc in recent days, leading to reducing the revenue and causing the financial crisis,” he added.

When contacted, PR Chief Executive Officer Salman Sadiq Sheikh admitted the facts related to severe financial crisis the PR is passing through these days.

“We are running our trains with three-day oil inventory as we don’t have money to maintain it for a month. The PR’s financial condition, like other departments, moves side by side with the government’s status that is also facing a similar situation,” he explained.

Mr Sheikh termed the information related to one-day oil stocks a few days ago and limiting of the freight train operation incorrect.

“It is true we made the freight train operation limited. But it is due to reduction in the cargo business and not the oil stocks,” he clarified.

The PR CEO said the administration was finding it hard even to clear salaries and pensions of a huge number of employees and pensioners on time.

To a question, he said the railways recently got Rs14bn out of the billions of rupees financial package received from the World Bank for the rehabilitation of flood affectees and flood-hit areas in Sindh and Balochistan. The Rs14bn, according to him, would only be spent for the rehabilitation of PR infrastructure damaged by devastating floods in Balochistan. To another question, he termed the overall financial situation of the railways very problematic.

“The government as well as the railways have no money. Pakistan State Oil, our oil supplier is also facing issues related to opening of LCs (letter of credits) for oil imports. The situation is tough for us,” the CEO said.

Published in Dawn, January 2nd, 2023