ISLAMABAD, Sept 27: The World Bank has estimated that transport weaknesses in Pakistan are causing annual competitiveness-based loss of Rs220 billion, which is six per cent of the gross domestic product (GDP).

In a report, submitted to the government early this month, the WB said the National Highway Authority (NHA), rather than focussing on constructing new roads, was giving importance to the ongoing projects, upgrading existing corridors and mobilizing resources for the maintenance through tolls.

The new management of the Pakistan Railways (PRs) cut losses last year by some 25 per cent over the previous year by reducing excess staff, rehabilitating assets and shedding non-core operations.

The report said the freight business had huge potential and could interest private sector investors if a right framework was in place but the PRs was reluctant to give up its freight business, which cross-subsidized its passenger service.

The WB said that although the PRs had once indicated a willingness to consider letting private freight operators run their own trains in exchange for track access fee but the national transport policy contained no mention of the private sector’s participation in any form.

Implementation, according to the report, has stalled on a government decision to gradually phase in private operating concessions at all ports. In aviation, the sale of shares of Pakistan International Airlines to strategic investors has been proposed but substantial pre-privatization technical and financial restructuring would be needed to attract private sector interest. Except in road transport services, the government agencies also dominate the transport sector, like railways and airlines.

The WB report said inefficiencies and high costs had seriously handicapped the country’s economic growth and export competitiveness.

Despite partial divesture, i.e. 12 per cent of shares of Pakistan Telecom (PTCL) in the early 1990’s, the government retains monopoly. PTCL’s exclusivity on all international and domestic fixed line telephone services expires on Dec 31, 2002. Four mobile cellular companies — including a subsidiary of the PTCL — are now operating in the country.

The bank said preparatory steps for PTCL privatization were under process and it was expected that the transaction would be completed shortly. It added that the slowing economic growth, poor export performance and failing investments were the features of the deteriorating performance of Pakistan’s economy during the whole decade of 1990’s.