Railways turnaround?

Published August 27, 2018

SHEIKH Rashid Ahmed is back at his old job as the Minister for Railways, with a plan to financially turn around this loss-making enterprise.

Speaking to the press at the Rawalpindi railway station on Thursday, the minister pledged to put the collapsing railways back on track by eliminating its deficit of Rs40bn by the end of the present financial year. He aims to achieve this target by cutting expenditure and increasing income from its core business of cargo and passenger operations. He called upon private businessmen to build luxury hotels and commercial plazas on railway land, and rent its tracks to operate cargo and passenger trains. His revival plan further includes selling the railway resthouses and handing over hospitals and schools to private investors, as well as making its large properties available for outdoor advertising. Additionally, Sheikh Rashid vowed to eliminate political interference in the railways’ affairs, and to weed out theft and corruption. He, nevertheless, did not say how he intended to slash the huge expense incurred by the company on account of more than 73,000 workers, the majority of whom are either underemployed or idle — the railways’ annual pay and pension bill of Rs54bn constituted around 68 per cent of its total expenditure in 2017.

The state-owned railways has been hampered by years of low investment in infrastructure, poor maintenance of its rolling stock, frequent accidents, corruption, theft, bureaucratic lethargy, gross mismanagement, and overstaffing, etc. Consequently, the quality of the service has decayed and losses have spiked. In the last five years, the government has injected nearly Rs185bn to fill the hole created by ever-increasing expenditure. The previous government had tried to revitalise the company through soft reforms and investment in passenger and freight operations. Although it succeeded in raising the revenues from Rs18bn to Rs40bn by transporting more cargo, the surge in expenditure mainly owing to pay and pension bill from Rs48.5bn to Rs80.8bn had also pushed the deficit to a new high. The minister’s plan appears to be quite doable, but it may take several years and the investment of billions of rupees before it can bear fruit. Private investors are unlikely to invest in the railways’ assets unless they are assured of the protection of their capital, because their experience of past dealings with the company hasn’t been very pleasant. In the meanwhile, the railways could focus on facilitating the traffic of daily commuters and increasing cargo operations.

Published in Dawn, August 27th, 2018

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