Clarification by Railways

"It is clarified with reference to the editorial carried by Business Recorder dated 11.07.2015 on railway losses that the said editorial is based on a draft report of Auditor General of Pakistan (AGP) which is yet to be approved by the President of Pakistan and then to be placed before National Assembly and its sub-committee PAC. The meetings of DACs are also yet to be held between Railway & Audit authorities. As a matter of routine many observations are settled when the replies are provided to audit and discussed in DAC meetings. To create sensation at this preliminary stage is neither called for nor justified.
"Contrary to the claim of the reporter, the present Government has never claimed to turn the Railways into a profit-making entity in one year. What the Government has claimed is (i) a reduction in loss as a percentage of the total expenditure in 2013-14 and (ii) increase in revenue as compared to the previous years. During the financial year 2012-13, the total loss of Pakistan Railways was 62.8 percent of the total expenditure. However, it was brought down to 58.8 percent in financial year 2013-14. In fact Pakistan Railway which was starved of funds and facing acute financial crunch needed initial investment to repair locos and rolling stock. A huge liability of Pension, G.P.Fund, gratuity and TA was lying pending when the present regime took over in 2013. Although the expenditure increased during first year 2013-14 due to the above-stated reasons but efforts were made to enhance revenue from 18 billion in 2012-13 to Rs 22.8 billion in 2013-14 which has now been increased to Rs 31.90 billion approx. in 2014-15. The operational loss has been reduced from 32.5 billion during 2013-14 to less than 30 billion in 2014-15. Pakistan Railway has achieved historical earnings in passenger and freight traffic during 2014-15.
"Since the Assets like Locos, Rolling Stock, Track and Infrastructure have become obsolete and no heed was paid to replace the same by previous regimes it was inevitable to enhance Capital Investment through PSDP. The increase in Development Budget has therefore no linkage with the ties of Federal Minister for Railways with Prime Minister which are purely of political nature. The increase in PSDP budget is gradual and part of overall turn-around strategy of PR. This is also incorrect that entire amount of 39.5 billion of PSDP was disbursed at the end of year 2014-15. A sum of Rs 31 billion was only released.
It is incorrect that Pakistan Railways is over stating the increase in deferred assets by making wrong bookings in the concerned accounts. "Pakistan Railways is doing the accounting treatment as per prevailing procedure. The deferred assets during financial year 2012-13 were Rs 51.3 billion and during 2013-14 Rs 55.128 billion. However, it is according to the approved format of the accounts of Pakistan railways and generally accepted Principles of Accounting and will continue till the new system of accounting is in place. On completion of ongoing PSDP Projects, the amount will be converted into tangible assets and deferred assets will reduce automatically.
"According to press report audit has observed that PR sustained a loss of Rs 566 million due to outsourcing of Business express train. This decision was objected by audit which was taken by ECC during the previous regime in March, 2013. The present administration of PR has referred again to the ECC for reversal of the earlier decision regarding revenue sharing of business train between railways and M/s 4 brothers' enterprises the decision of reversal is still in abeyance.
"This is also not correct that Pakistan Railways is utilizing General Provident Fund (GPF) of its employees for purchase of diesel oil. Pakistan Railways owes an amount of Rs 6.145 billion as on 30-06-2014 to its employees which is very much available in Account III & XI of Pakistan Railway being maintained with State Bank of Pakistan. Payments are regularly being made on account of GFP (Advance) to its active employees and GPF (Final Settlement Account) to the retiring railway employees along with payment of interest/profit on government rates. Amounts of Rs 84 million and 93 million have been paid during the financial years 2013-14 and 2014-15 on account of G.P.Fund settlements. The system of GPF is being further improved.
The Federal Government has approved and State Bank of Pakistan opened Account No 21 in their books for maintaining the separate balance exclusively for GPF (Railways). Federal Government has also conveyed approval for investing the balance amount of GPF (Railways) in Government Treasury Bills and Government Securities for earning interest/profit
"Pakistan Railway is increasing its revenue gradually with consistent effort. Its freight operation alone has earned 8.5 billion during 2014-15 as compared to 1 billion only during 2012-13 and overall revenue has touched the figure of 32 billion in 2014-15 as compared to 18 billion in 2013-14. This increase is due to Capital Investment and improved fleet of Locos, Rolling Stock and Infrastructure raising net worth of Pakistan Railways. Last but not least, Pakistan Railway has achieved these highest ever historical figures by dint of good governance, improvement in timings and service delivery to its clients through better train operations."