Pakistan Railways fails to earn Rs6bn in potential revenue

LAHORE: Pakistan Railways (PR), which is passing through its worst-ever financial crisis and even unable to clear monthly salary to its employees, pension payments to retired staff, and vendor payments on time, has failed to earn potential revenue amounting to Rs6.1 billion in track access charges in FY23.

“This marks a deplorable example of incompetence, laziness, and a self-serving attitude among senior PR officers who lack an innovative approach, particularly in managing the freight sector. This attitude deprived the PR of Rs6.1bn in track access charge revenue,” a former senior PR officer said, while talking to Dawn on Saturday.

“Losing Rs6.1bn revenue is a part of the total loss of Rs55bn the PR suffered in the FY23,” he added.

He said that the freight sector required no additional investment, as PR already possessed the necessary infrastructure, including tracks, goods wagons, and locomotives. According to him, several parties desired to invest, but PR didn’t seize this opportunity.

AGP audit unveils implementation delays leading to court cases and revenue loss

According to the Auditor General of Pakistan’s report on PR’s affairs, the Pakistan Railways Freight Transportation Company (PRFTC) letter, dated Nov 29, 2019 (No PRFTC/PMO-TAC/2019), states that the Ministry of Railways entrusted the charge of Head of Project Management Office to the CEO/PRFTC for managing Track Access Agreements.

Furthermore, a PRFTC letter, dated Dec 8, 2020, stipulated that PR would realise an average of Rs6.1bn annually through the implementation of track access agreements.

During the audit, it was observed that PR obtained approval for track access agreements from the federal cabinet and Railway Board in 2010 and 2011. Consequently, agreements were executed with Pakistan Intermodal Limited (PIL) and Fast Track Silver Link (Pvt) Limited in 2013. These agreements aimed to involve private parties for investment and expertise, allowing them to operate freight trains using their rolling stock while paying Track Access Charges to PR.

It noted that the Project Management Office (PMO) was established in 2019, six years after the agreements were made. The Ministry of Railways had entrusted the CEO of PRFTC with leading the PMO to achieve the agreed objectives, but no progress was made by PRFTC management. Consequently, private parties and investors, PIL and FTSLL, filed a lawsuit due to the non-implementation of the agreements.

“This not only deprived PR of potential earnings of Rs6.1bn per annum, as mentioned in above-referred letter, but also forced it to face court cases. This also caused loss to PRFTC and PR (reputation) as well,” reprimands the audit.

The audit recommended an explanation for the non-implementation of track access agreements, a thorough investigation to assign responsibility for those at fault, and immediate action to realise the potential revenue from track access.

Furthermore, the audit suggested that financial statements should reflect all transaction effects to provide a true and fair view of PR’s financial position. It called for executing agreements with private parties as per PR’s mandate to enhance railway revenue, adhering to public procurement rules, improving contract management, strengthening the recovery policy, expediting scrap disposal, investigating fraud and embezzlement cases, and enhancing internal controls to ensure the replacement of defective materials within warranty periods.“

PR chairman and CEO were not available for comments.