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The railways as a metaphor

June 08, 2013

A FORTNIGHT or so ago, the New York Times ran a long front-page piece on Pakistan Railways (PR) by its Pakistan bureau chief, Declan Walsh.

Declan, a good friend and probably the best-informed foreign correspondent to have covered Pakistan, based his story on a train journey from Peshawar to Karachi. Full of humour, sympathy, colour and detail, the account is more of a metaphor for Pakistan than a straightforward travel piece.

As somebody who has watched the downward trajectory of our national rail system for a number of years, I read Declan’s account with great interest and concern. I began my civil service career in the late ’60s with PR’s finance department. At that time, the track from Lahore to Khanewal had been electrified and the Karachi circular train was about to be launched.

That no further electrification was undertaken, and the Karachi circular railway ran only briefly, is a sad comment on the system as well as on national priorities. Another fact to reflect on is that since independence, we have failed to add a single mile to the rail network.

Within the splendid red-brick railway headquarters’ building in Lahore, one could not imagine then that the organisation was at the beginning of its death spiral. Senior officers lived in large colonial houses in Mayo Gardens, with its tree-lined roads and its own electricity supply. As I rose up the ladder, I was allotted the biggest house I have ever lived in, before or since. One could swim, play tennis or golf virtually free of cost at the subsidised clubs run by the organisation for its officers.

In its heyday, PR had a virtual monopoly on bulk transport and passenger traffic. I recall countless train journeys in air-conditioned comfort, with trains generally running on time, and the system working reasonably efficiently. Pretty much like the rest of the country, in fact.

It all started to go downhill under the later years of Ayub Khan when the truck lobby from Khyber Pakhtunkhwa province (then the NWFP) prevailed in persuading the government to divert resources to the road sector, and the railway’s monopoly on bulk goods transport was challenged. As bureaucrats used to having businessmen beg and bribe them to make wagons available, PR’s commercial officers were unable to provide the kind of flexibility the new environment demanded.

The last nail in PR’s coffin was driven by the National Logistics Cell, an organisation set up under the Ziaul Haq regime. The NLC ran a large fleet of trucks (with hefty kickbacks allegedly paid to army officers involved in their purchase). This fleet is now almost non-existent, but the NLC still has the right to nominate carriers of government goods, so corruption is still reportedly rampant.

The economics of train transport is such that passenger services are usually subsidised by goods traffic. As PR’s share of bulk cargo fell, passenger services began to suffer. In real terms, government investment in engines, track and wagons declined. So, too, did PR’s finances. From being a profitable organisation, the system is now barely surviving on subsidies.

Other countries also support their railways for a variety of reasons. They remain the most economical mode of transport, as well as the most environmentally friendly. France, for example, maintains one of the world’s most efficient systems and subsidises it through national and regional budgets. India runs the world’s biggest and most profitable rail network.

Apart from its systemic problems, PR has also suffered from the corruption and inefficiency endemic in our state enterprises. In my days with the railways, I noticed that even the homes of many junior officers seemed to be far more lavishly furnished and equipped than mine was. And overstaffing was chronic.

In a sense, PR’s agony has been replicated across other state-owned enterprises. As long as they enjoy a monopoly, they thrive, with the consumer paying for their inefficiency and corruption. As soon as they face competition and begin bleeding red ink, the burden shifts to the taxpayer.

Thus, Pakistan Steel, the country’s biggest industrial enterprise, did very well behind high tariff barriers. But as soon as our international commitments to free trade forced duties of imported steel down, it entered a nosedive from which it has never recovered.

As its finance director, I recall the constant sense of crisis that hung over this enterprise as we struggled to keep it going. There were long negotiations with the banks and the finance ministry for a lifeline. After I left, a series of bailouts have kept this white elephant alive. Sadly, privatisation was thwarted by the Supreme Court, and since then, billions more in handouts have been pumped in; no talk of accountability here.

The national airline, too, is in freefall. Again, its golden era was before foreign carriers were allowed to compete for traffic. Over the years, successive governments have forced their appointed CEOs to recruit party supporters. As a result, the aircraft-to-staff ratio in PIA is one of the most lopsided in the industry.

The problem this government will face is that all the three organisations mentioned here need such huge infusions of capital that privatisation is the only option available. But in all three, the unions have a stranglehold, and will make life difficult for any new owners. Downsizing is a tricky policy, and Nawaz Sharif will have his hands full of the political fallout. In any case, it will be interesting to see if our higher judiciary will block the sale of these loss-making enterprises, as it did with Pakistan Steel.

Tailpiece: Barely two days before the May 11 elections, Declan Walsh’s visa was cancelled for unknown reasons. Considering his deep knowledge and affection for Pakistan, as reflected by nine years of reporting, this ill-considered decision is something the new government should reverse immediately.