LAHORE: The Pakistan Railways has asked the Pakistan State Oil (PSO), the state-owned oil supply and marketing entity, to make fuel available at its fuel storage points so that it doesn’t have to transport oil from the oil company’s depots.

The department has given a go-ahead to its officers to also contact other market players for better services and it has also accelerated efforts to introduce an efficient fuel management system to control oil theft and to save money, Dawn has learnt.

“Under the existing arrangement, we are getting supplies at the PSO depots, which means our tank wagon goes there to get fuel. As the arrangement is costing us heavily, we have asked the company to provide us oil at our facility (oil storage facility),” Pakistan Railways Chief Executive Officer Amir Ali Baloch told Dawn on Friday.

“The company (PSO) has agreed to our stance. But presently it is working on this in terms of financial impact, operational costs, transportation etc,” he added.

Move is aimed at saving transport cost that railways bears

It is pertinent to mention that in 2021, some issues related to the delay in payments, oil supply etc had occurred between the railways and the PSO, forcing the former to consider a proposal seeking termination of service contract with the latter and joining hands with any private sector oil marketing company (OMC) for better services.

Keeping in view the recommendations of a third party forensic audit, the railways had also decided to modernise its all 14 fuel storage sites in collaboration with the OMC, pledging the provision of the best services in this regard.

The issues, according to the then management, also included tax deductions, oil supply and price. The railways requires about 1.5 million litres of oil worth Rs20bn annually for its passenger and freight train operations that is 30pc of its total operational cost. Around 70m passengers use railways for travel annually and several freight companies use railways for goods transportation. The department has 14 sites where the locomotives’ fuel tanks are filled. Three sites are situated in Karachi, Sukkur and two each in Quetta, Multan, Lahore, Rawalpindi and Peshawar.

In response to the PR plan, the PSO’s then management had responded quickly, announcing that it would also review its multiple agreements with Pakistan Railways (PR).

“At present, we have no issue with the PSO. They are agreed to supply fuel at our facility,” the PR CEO maintained.

To a question, he said the PR has also accelerated efforts to shift its manual fuel management system.

According to him, the PR is in talks with various companies to introduce an efficient online fuel management system.

“The problems we have been facing in this regard are dollar exchange rate, price fluctuation and mode of agreement,” he said and added that the PR wanted an agreement for this purpose under services model that means provision of such fuel management services on their own investments and receive minimal charges from railways in a phased manner.

To another question, he said the existing manual system involved 37 entries of fuel consumption which had become very hectic and needed to be replaced by the modern systems.

Published in Dawn, December 23rd, 2023