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NLC may come to Pakistan Railways rescue

January 21, 2013

ISLAMABAD, Jan 21: The National Logistic Cell (NLC) and Pakistan Railways are negotiating an agreement whereby the NLC will repair 21 out of order locomotives of the cash strapped railways.

In return, the railways will allow the NLC to use 13 of the repaired engines for its freight service, whereas rest of the eight locomotives will be put into use for its passenger trains.

This information was placed by the minister for railways, Haji Ghulam Ahmed Bilour, before the National Assembly on Monday during question-hour session.

Providing details of the agreement in a written reply, the railway minister said 16 of these locomotives were of GMU-30 make, and five belonged to Hitachi. If the agreement gets materialized, the NLC will arrange finances for the repair of these locomotives, and Pakistan Railways will procure the spare parts. The financial amount will be repaid to the NLC through rebate in the freight charges.

Talking to Dawn, a senior official of the PR, who was privy to the development, said the agreement by all means would be a win-win situation for both the parties.

“The PR is desperately in need of locomotives and on the other hand the NLC is one of the major clients of our freight trains. The agreement will immensely benefit both the NLC and the PR,” the official explained.  Due to shortage of locomotives, the PR over the past five years had severely cut down its operations in the country.


In response to another question asked by Ms Seema Mohiuddin Jameeli, the minister for railways gave five reasons for the continuous losses the PR faces.

According to Mr Bilour, non-availability of locomotives due to deferred maintenance of old fleet for want of of funds had badly affected passenger as well as freight train operations, which were its main source of earning.

Secondly, the PR is a public service entity and does not operate purely on commercial lines, hence, most of the time it has to run operations purely for public interest, said the minister.

Besides increase in fuel, gas and electricity costs over the years, raise in salaries and pensions has also added to financial burden of the railways.

Unprecedented floods during 2010-2011 damaged rail network inflicting Rs6.73 billion losses to the PR, said the minister.

A delayed deal

Replying to a third question, the railway minister told the house that an agreement with a Chinese firm to import 57 locomotives was facing procedural delays. And to address the cause of the delay, a summary had been submitted to the cabinet for consideration.

A contract agreement for procurement and manufacture of 75 diesel electric locomotives amounting to $105.143 million was signed with M/S Dongfang Electric Corporation, China on December 31, 2008.

Down-payment of $15.771 million, comprising 15 per cent of the contract amount, was released to the firm in June 2009. Buyer’s loan agreement was signed with Export-Import Bank of China on December 14, 2009 for the remaining 85 per cent ($89.372 million) and an amount of $10.801 million was transferred to China Exim Bank and Sinosure in March 2010. However, Letter of Credit has not yet been established.

The agreement has not been materialised so far due to some procedural violations of rules by the Public Procurement Regulatory Authority (PPRA) during tender process, rectification of which required endorsement by the competent authority.

Out of 75 locomotives, 25 will be received in completely built up condition, whereas the remaining 50 will be manufactured and assembled locally at Pakistan Locomotive Factory, Risalpur. The entire material is scheduled to be delivered within 45 months after the effectiveness of the contract agreement.