LAHORE: Three private companies, which had been awarded a contract to run wagons under phase one of the Pakistan Railways project to outsource its freight business four months ago, have surprisingly backed out, Dawn has learned.

The companies also surprisingly continued using hundred of freight wagons for the transportation of imported coal from Karachi to various destinations without signing the project award agreement and submitting the performance bank guarantees, it is further learned.

“It is a major scam as the firms declared successful after a lengthy bidding process not only backed out of their commitment under a revenue-sharing model but also continued operating the wagons without submitting the bank guarantees,” reveals a former senior executive of PR. “But unfortunately, nothing was done to secure the department and the firms fled on the pretext of loss due to reduction in the cargo,” he deplored.

The PR’s freight business ranges between Rs17-18 billion per annum since 2016-17 including about Rs12bn coming from the dedicated state-run Karachi-Sahiwal coal transportation for running the Sahiwal coal-fired power plant.

However, the process to increase and take the freight revenue to Rs35bn was initiated around one year back in a bid to bring down losses and turn the state-run organisation into a profit-earning entity.

Railways last year initiated the bidding process for gradual outsourcing of its 12,000 wagons. Under phase one, some of the bidders cumulatively offered Rs13bn per annum for running these wagons, but the PR unfairly awarded the project to some others.

“The firms continued running around 300 wagons (Karachi to Daood Khel and Jia Bagga without signing the agreement and the performance guarantee. But the senior PR officials kept allowing them to do so surprisingly. It is a crime really,” the source said. “Had the PR accepted Rs13bn guaranteed offer from the companies of good repute it rejected, it would have not seen such a bad situation,” he maintained.

When contacted, the PR’s Chief Executive Officer Nisar Memon said the reason behind backing out of the firms from the project is the import of coal through Afghanistan being transported by the road goods transport operations.

Mr Memon admitted that they (the companies) didn’t sign the agreement as they wanted to add some clauses in this for their protection. “But they had submitted bank guarantees we sought under the agreement,” he said.

Published in Dawn, January 28th, 2022