Railway losses

According to the Auditor General of Pakistan's (AGP) report 2014-15 and submitted to the President and the National Assembly, net losses of Pakistan Railways (PR) increased by 7 percent in 2013-14, the first-year of the tenure of Khawaja Saad Rafiq as Railways Minister. Thus from net loss of 30.5 billion rupees during the last year of the PPP-led coalition government net loss rose to 32.52 billion rupees the following year - data that challenges the veracity of Saad Rafiq's claims that he took just one year to turn the financial fortunes of PR around. The report also notes that the PR failed to achieve its target of zero operational deficit with total operational expenditure at 55.3 billion rupees while gross earnings were less than 50 percent at 22.8 billion rupees.
In this context it is relevant to note that the Economic Survey 2014-15 indicates 18 billion rupees as PR earnings in 2012-13, 22.8 billion rupees in 2013-14 and 23.2 billion rupees in 2014-15. The Survey also notes 'business express' train from Lahore to Karachi as part of the PML-N vision 2025. However, the more credible AGP report mentions the "wrong decision" of the Economic Coordination Committee (ECC) of the Cabinet to award contract of business train to a private party which has not cleared its dues. And what is baffling is that the PR Ministry has not submitted a summary for recovery of the money as is being repeatedly requested by the PR management, the AGP report further notes.
The AGP further reveals that PR's capital and net worth rose by around 22 billion rupees in 2013-14 as a component of the federal Public Sector Development Programme (PSDP). Critics of Saad Rafique maintain that this rise may have been possible because of his close family ties with the Prime Minister Nawaz Sharif.
In the last budget of the PPP-led coalition government total PSDP allocation for PR was 22.87 billion rupees which was raised to 25.8 billion rupees in the revised estimates, however, it is unclear whether this raise was during the caretaker set-up (March to June 2013) or whether this post-dated 6 June when Prime Minister Nawaz Sharif took oath and appointed his cabinet. It is a matter of record that the then newly appointed Finance Minister Ishaq Dar engaged in heavy borrowing - to the tune of over 400 billion rupees to eliminate the circular debt on the last day of the year to conveniently absolve his party of all blame for a consequent rise in the deficit - and may perhaps have accommodated the demand for additional funds by PR for the same reason. In 2013-14, PR was budgeted an allocation of 30.9 billion rupees and received 28 billion rupees and in 2014-15 allocation for PR was 39.5 billion rupees with the entire amount disbursed by the end of the year. The budget for 2015-16 projects an allocation to PR of 41 billion rupees or in other words a steady rise in allocations from PSDP.
Some irregularities in PR accounting are a source of serious concern but most importantly PR under Saad Rafique continued to deduct general provident fund regularly collecting a total of 145 billion rupees under this head during the year; however, it continued to violate the mandatory statutory requirement to maintain this fund separately and instead utilized it to meet other expenditures which led to an overdraft that was lower by this amount. In other words, this implies that the GPF remains unavailable to staff.
The PML-N government, unfortunately, remains focused on infrastructure development projects - in power, roads, rail transport - however, there is little attention to attaining existing capacity through improved governance. Thus while in the power sector ambitious projects at a cost of billions of dollars are envisaged yet there is little attempt to ensure the installed capacity of 23,840 MW is actually generated. In PR too the ambitious costly projects are envisaged while losses are simply rising. It is hoped that the government turns its focus also on short- and medium-term measures that would exploit existing capacity.