The government is working to develop a communication infrastructure and modernising rail networks in partnership with the private sector to revamp the railways that has been under severe financial crunch due to permanent losses.
"Government can use the option of involving private sector participation in railway system under public private partnership model to restructure Pakistan Railways to run it on commercial basis," a senior official said adding that Pakistan Railway sector offers tremendous potential for private sector participation while bringing improvement for the quality of services for the citizens and business community.
Infrastructure Project Development Facility (IPDF) is working to implement "Track Access Project" for Pakistan Railways under public-private partnership (PPP) model. IPDF had received interest from more than 15 parties to operate cargo trains for various products on Pakistan Railway's infrastructure on PPP modality.
Pakistan Railways has been neglected by the previous governments in the past but the current government is working on plans for building strong partnership with the private sector to revamp Pakistan Railways. Government has planned in developing communication infrastructure and modernising rail networks and already several initiatives have been planned in partnership with the private sector to restructure the railways under the instructions of President Asif Ali Zardari. 'Track Access Project' will fulfil the potential backlog of rolling stock (locomotives and wagons) for the Pakistan Railways. The project is primarily meant for transport operators, power plants, oil marketing and refinery companies, freight forwarders and cement manufacturers. The routine operations and maintenance will be undertaken by the private sector, whereby the major overhauling expenditure will be undertaken by Pakistan Railways on cost basis.
Public private partnership modality is being executed in most of the countries of the world and they have achieved remarkable infrastructure development by involving private sector under this framework. "Under restructuring of Pakistan Railways with private partnership, the focus will be on good governance and regulation, while providing an enabling environment for the generation of investment opportunities in Pakistan to harness the private sector as the engine of growth for the economy," official said.
"The project will also go a long way in helping operate freight and passenger trains on the track of Pakistan Railways on the basis of FOOT (Finance, Own, Operate and Transfer) basis, whereby the private operator will pay the relevant track access charge to Pakistan Railways for utilising its infrastructure," official added.
The private investors will also benefit immensely from such an initiative as the freight transfer is increasing at 5 percent on average per year with Pakistan Railway's share remaining over 15 percent in terms of reliable commodities. Similarly, rail continues to remain the cheapest mode of transferring freight in Pakistan and the cost is estimated to be around 50 percent less than road transport.
The Track Access Project has envisaged an average cost of Rs 4 billion for operating one train. The envisaged concession period is also expected to be 20 years, which is the useful life of the locomotive. The routine operations and maintenance will be undertaken by the private sector, whereby Pakistan Railways on cost basis will undertake the major overhauling expenditure.
Official in Ministry of Railway said that as trains were going to be closed, government would encourage private sector to invest in Pakistan Railways. He said that products for which the financial model had been made include transportation of oil, general cargo, container cargo, rock phosphate, coal and cement. The products have been chosen on the basis of highest demand, whereby Pakistan Railways has the current demand to transport 3 trains per day for products such as oil.
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