The government has decided to put Pakistan Railways (PR) corporatisation on fast track and to streamline the organisation under National Trade Corridor (NTC) plan. The government has asked the PR to appoint chief executive officer (CEO) to run the affairs in a few weeks.
Ensuring that Pakistan obtains full benefit from more far-reaching options will require substantial development of the legal and regulatory framework as well as in the structure and operation of PR.
The government is already moving to provide greater commercial freedom by the conversion of PR into the Pakistan Railway Corporation (PRC) and it is assumed that this conversion would take effect from 2007-08.
The PR corporate plan has therefore been prepared on the basis of a policy of liberalisation and corporatisation within the railway sector and it is assumed that, following corporatisation, the new PRC would be encouraged to operate with a sharper commercial focus.
According to the Pakistan Rail Corporation Act, the legislation to convert the current Pakistan Railways into the Pakistan Railways Corporation (PRC) is currently in the final stages of discussion between stakeholders. As part of this process, the present PR organisation will be dissolved and the management, employees and assets to be moved into PRC. The PRC will be a corporate body formed under the Companies Act and subject to Company Law.
PRC BOARD:
The PRC Board will initially consist of a Chairman, Chief Executive Officer (CEO) and nine Directors. Three of the directors will be the secretaries of the Railway, Planning and Development and Finance Divisions, three will be PRC senior management and three will be from the private sector, appointed by the government.
STAFF PLANS:
The management and staff will also transfer with unchanged salary and conditions of employment, including recognition of previous service and pensions rights. Rights and liabilities under existing contracts may be enforced by and against PRC and any existing legal proceedings will continue with PRC taking the place of PR.
DEBTS AND LOANS:
The current debts and loans of PR will be transferred to the government, who will be responsible for their repayment and servicing. The government will assume responsibility for the pension payments of both retired and existing employees, with PRC only responsible for the pensions of new employees. The government will also continue to finance the development, upgrading and rehabilitation of infrastructure as well as rolling stock under certain circumstances. Tariffs will be determined by the PRC Board and will be market-based. Where it is required to operate uneconomical services, either as a Public Service Obligation (PSO) or as a defence requirement, the government will compensate it. The PRC can also form subsidiaries using similar processes as required.
CORPORATISATION OBJECTIVES:
The corporatisation, which is consistent with overall government policy, will thus encourage the commercial exploitation of railway assets, open up financing mechanisms and rationalise the corporate structure, as well as further facilitating PSP.
The potential for private sector participation (PSP) within the railway sector and would assess the extent to it, desirable and practical within the plan period. The analysis concludes that there is considerable scope in the short-medium term for extending PSP for service contracts, the leasing of rolling stock and equipment and the introduction of negotiated track access arrangements.
The long-term strategic objectives of the government includes the institutional, corporate and financial restructuring of the assets and responsibilities within the rail sector, including the progressive transfer of responsibility for selected assets and services from the public to the private sector.
Within the timeframe of the corporate plan, it is not expected that any core activities will be transferred, although any major network development could involve the private sector, either through a joint venture (JV) or as a stand-alone concession.
The existing Railways Act, developed in 1890, covers the whole of India at a time when many public and private railways were operating independently. Although it has been amended many times in the intervening period, its fundamental structure has survived more or less intact. In particular, it does not restrict itself to government railways but instead deals more generally with 'railways' and 'railway administrations'.
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