Pakistan RailwaysRevitalization

Challenges and Response

Pakistan RailwaysRevitalization

Challenges and Response

Muhammad Arham Afzal10-EE-66

Muhammad Naveed Iqbal10-EE-182

Muhammad Rehan Raza10-EE-122

Muhammad Farooq10-EE-134

Group Members

Introduction Importance of Railways and its Decline

Problems Faced to Pakistan Railways Causes of decline How to fix it ? Conclusion

Sequence

Pakistan Railways, lifeline of the country, is a national state-run transport service. Among the means of transportation railways are the cheapest and safest mode for passengers and goods. It also helps in growth of economy for the country.

It is under the administration of federal government and its head quarter is in Lahore. It is an important source of transportation throughout Pakistan. It carries millions of passengers throughout the country. It used to carry huge freight in Pakistan.

Introduction

This cheap and safe mode for passengers is now facing a number of issues.

A number of services of Pakistan Railways have been cancelled, suspended or terminated and many more will be suspended in near future because of mismanagement and shortage of locomotives, fuel and money.

The chapter of all major services, from Lahore to Karachi, has been closed. It is pertinent to mention that all AC services have been stopped.

Introduction

The incompetent administration has failed to attain locomotives from any quarter of the world.

Passengers are suffering due to mismanagement of administration. Pakistan Railways decision to suspend goods train service due to severe shortage of locomotives and fuel is another blow to this organization.

It is now basically financially bankrupt organization. In other words it is on the verge of financial collapse.

Introduction

The political interference, nepotism, corruption, poor maintenance of tracks & bridges and mismanagement in almost every field are the major causes of failure of Pakistan Railways.

Pakistan Railways purchased 69 completely built locomotive units from China under 2003 agreement. These are about 37% cheaper than the European locomotives but considered to be faulty.

It is stated that 32 of these have already been scrapped. Dong Fang Electric Corporation has been severely criticized for producing low quality locomotives.

Introduction

Naturally trains are too late and passengers can be seen sitting at platforms with their luggage. A number of trains lack facility of light at nights because of the failure of the generators and ill attitude of management.

There are complaints that reservation is confirmed after receiving bribe of hundred or more rupees by passengers. Pakistan Railways is no more the best choice to travel for the passengers.

Introduction

Pakistan Railways has been playing a very crucial role in social, economic and political development of Pakistan from

Employing more than 80,000 persons

Employment indirectly to at least ten times more

Importance of Pakistan Railways

Contributes substantially to the GDP of the country.

With more than 80 million passengers every year

Being the cheapest mode of transportation of goods and commuting passengers, it has been the pivot of Pakistan’s development.

Importance of Pakistan Railways

PR is not only a symbol of unity of the country but also a vehicle of social and political integration

Rail transport consumes only one sixth of the energy per unit weight-km as compared to road transport

Importance of Pakistan Railways

Less polluting source of traffic-emissions

Rail death caused by accidents are much lower than road

Average death rate per year on roads are more than 10,000 per year as compared to less than 100 in railway system.

Importance of Pakistan Railways

During any disaster or emergency Pakistan Railways has been the most preferred means of transporting relief goods in the shortest possible time

Keeping in view the geographical contours of Pakistan, it is an excellent and economical mode of transportation for long distance goods haulage.

Importance of Pakistan Railways

This public state enterprise is also the largest civil employer in the country.

Over the years, lack of attention, poor policies, increasing expenditures, misappropriation of funds, nepotism and most recently, the floods have left the Railways with huge deficits running in billions of rupees.

Till the 1970s, Pakistan Railways was run by an autonomous four-member policy forming Railway Board which constituted a Member Traffic, Member Mechanical, Member Civil and Member Finance.

Decline of Pakistan Railway

In 1990, the government appointed an officer from the Civil Services of Pakistan chairman and from then on there has been a rapid decline not only in performance but also the balance sheet of the organization.

Till 1990, the carriage factory in Islamabad was exporting freight wagons and coaches to Sri Lanka and Bangladesh, in addition to meeting local requirements.

Decline of Pakistan Railway

Rather than augmenting this facility, the lure of kickbacks has resulted in its virtual shut down and orders were placed for import of carriages.

Although Moghalpura has facility to produce High Capacity (HC) wagons, the same were imported from China.

These imported wagons have the handicap that they cannot work on branch lines because of axle load limitations.

Decline of Pakistan Railway

Railways are suffering huge losses for maintaining lines whose service has not been done.

Railways are operating at low rates. A flexible policy for rates and fare requires to be adopted whereby freight rates could be varied according to the type of commodities

Problems Faced to Pakistan Railways

The industrial units of railways are running at a loss. The locomotive factory, sleeper factories and the carriage factory as well as the other large manufacturing units of railways need to be converted into autonomous corporations.

The operational efficiency of the railways is very low. The overall efficiency of the railways requires to be improved through better managerial and operational techniques.

Problems Faced to Pakistan Railways

The bulk of railways earnings are drawn from freight services which are not being accorded the priority they deserve.

Good traffic need to be accorded higher priority in the assigning of locomotive power relative to passenger services, particularly on the branch lines.

Problems Faced to Pakistan Railways

2007-08

2008-09

2009-10

2010-11

2011-12

Q2 2012-

13

-30

-25

-20

-15

-10

-5

0

-15.9

-20.2

-23.06

-28.45

-13 -13.3

Years of PR's Profit / Loss

Profit in bil-lions

YearsN

et

Pro

fit

/ Loss a

fter

ded

ucti

on

s

Despite having world’s best railway track flowing across the country like the course of rivers, Pakistan Railway proved is just like a “White Elephant” as its slope is on a ramp in declining phase since 90’s.

There are various reasons of the decline of the Pakistan railway. They are categorized as:

1. Political causes2. Technical causes3. Managerial cause

Causes of Decline

Institutional dichotomy

Governance Issues

Corruption

Political Causes

Instead of a commercial organization, became a bureaucratic organization where rules and procedures count more than end results.

Direct interference of bureaucrats in the purely technical issues always leads to ineffective service delivery.

Institutional Dichotomy

Running a commercial organization with political considerations cannot yield profits, just losses.

Posting/ transfers made on political basis which affects the operational efficiency and employees morale.

Governance Issues

Corruption is the biggest problem Pakistan Railways is facing today. A government spokesman said

that the Federal Minister Cabinet approved Rs.10.1 billion in August 2011 for PR to upgrade equipment but only Rs.1 billion has utilized in PR’s concern. It is due to the no check and

balance in Pakistan railway

Corruption

Shortage of Locomotives: The Pakistan Railways has a total of 546

locomotives but only 290 are on track while the rest are out of order. Similarly, 70 per cent carriages are out of service.

Currently only 58 locomotives are in working conditions and needs consistent repair and maintenance.

This is a major cause of the crisis of Pakistan Railway in revenue generation

Technical Causes

Bunged Supply of Fuel: This problem began from January 2011

when a Pakistan Railway was unable to pay Rs.700 million to PSO and in consequences PSO stopped the supply of fuel to Pakistan Railway.

According to a senior officer at Railways Headquarter 30 freight trains had to be stationed in yards.

Technical Causes

Decrease in Revenues: Increased Costs: Consumer Dissatisfaction: Underinvestment

Managerial Causes

Constant fall in earnings of the Pakistan Railways has been the prime reason for the continuous losses it is suffering. This in turn is due to three major reasons

Reduction in its train operations either because of shortage of locomotives and passenger bogies

Prices of oil are increase but Pakistan railway not increase the prices

Corruption is the third major reason for the revenues falling sort of the targets fixed annually

Decrease in revenues

lack of proper checks and balances create loopholes for corruption even in the presence of best legal framework and institutional mechanism

Pakistan railway has 90,000 employees which are more than required

out of 90,000 employees 01 locomotive has a burden of 1,516 employees other than the operational cost

Increased Costs

After 1973 Pakistan Railways' budget was amalgamated with the national budget with the result that the profit they earned was diverted to other heads, leaving less and less for its maintenance, expansion and improvement.

On the other hand, the Government spent three times more on road

sector. It was this combination of neglect to railways and preference to roads, which is the root cause of the present malady of Pakistan Railways.

Ministry of Railways ,which is responsible for providing funds for the maintenance and development of the provision of the railway network has no long-term framework for capital support to perform these roles.

Underinvestment

There is no time management due to which consumer is not satisfy.

Most of the complaints are about extremely low quality of services provided.

Disrespectful attitudes of the employees towards the passengers

Consumer Dissatisfaction

Helping directly to increase Pakistan's growth rate

Providing safe, modern, convenient and comfortable mode of transport for the public at affordable prices

Becoming hub of transport connectivity

National integration by providing the nation a symbol and a vehicle of national unity

Strategic Objectives

• Finalize the national transport policy with aim and objectives

• It will give the direction to the transport sector

• It will also end the unnecessary competition

Institutional Restructuring

• After the finalization of a transport policy, finalize and promulgate new legal framework

• Establish Railway Regulatory Authority (RRA).

• Let the Ministry be responsible for policy formulation

• Corporatize PR and establish it as Pakistan Railways Corporation (PRC)

Restructuring of governance mechanism

• Resolve the issue of social obligations of the state vs. commercial expectations from PR

• If Pakistan Railways have to be run as a government department.

• Salaries, pension, operational maintenance and developmental

• expenditure should be considered as public expenditure

Financial Restructuring

Pakistan railways needs to be run on purely commercial considerations  

Operational rationalization Human resource Assets-concentrating on core activities and

outsourcing peripheral activities, i.e. education, health, sports etc.

Rationalization

Even the present legal framework and institutional mechanism is robust.

Authority with responsibility and proper incentives and rewards.

Add transparency in procurement and sale, computerization of income, expenditure and assets

Governance Improvement

Political corruption.

Financial corruption.

Right use of budget.

Eradicate Corruption

Pakistan railways needs

massive investment.

Providing budget on

time.

Need investment funds

even privatize it

Investment

critical areas which need investment.

Is it necessary all fund

provide by state?

Investment

Suggestions for selling land of Pakistan railway

Commercialization PR’s assets other than land

Similarly sale of advertising rights

Scrutinitization of the contracts

Commercialization of Assets

Outsourcing of operation.

Corporation of entities.

Indigenization

Some more steps…..

Corruption control

Removal of nepotistic persons

Timing and Scheduling

Decreasing the fairs

Recent Steps of Improvement

Keeping in view the strategic and commercial importance of an efficiently run railways as well as social obligations of the state to provide affordable and cost effective mode of transportation to the public, Pakistan railways should be given due importance

National transportation policy should be finalized as early as possible so that the funds allocated for transportation sector could be judiciously distributed among different modes of transportation

Pakistan railways should be run on purely commercial considerations and across the board subsidy needs to be replaced with targeted relief to passengers with limited means,

Outsourcing of operations, corporatization of its entities with subsequent privatization and a strict accountability regime are some of the other essential measures for effective service delivery

Conclusion

Thanks