Pensions, utilities & fuel liabilities: Railways facing around Rs 8 billion deficit

Pakistan Railways, despite getting a subsidy of Rs39 billion in the 2019-2020 budget, is facing a deficit of around Rs8 billion to meet its pensions, utilities and fuel liabilities. Sources revealed to the Business Recorder that fearing unrest due to inability to clear pension liabilities, a summary for grant of Rs4.1 billion had been submitted to the Finance Ministry.

According to official documents, the government approved the budget estimates 2019-2020 to the tune of Rs97 billion for Pakistan Railways including Rs58 billion revenue receipts and Rs39 billion under the head of subsidy.

In addition, Rs100 million was allocated for renovation of railways police buildings to be financed by the US Embassy, which made the total allocation of Rs97.1 billion for the current financial year. Against the budget estimates of Rs97 billion, expenses up to January 2020 were Rs57.949 billion i.e. 59.7 percent.

Pakistan Railways is however facing a financial crunch due to increase in pension, expenses, fuel and increase in per unit electricity. Due to the policy of liberalization of pension rules adopted July 1, 2015 and decision for restoration of commuted value of pension July 1, 2015, the burden on Railways finances is continuously increasing.

The government has opened closed pension cases for allowing pension to widows/divorced daughters as per liberalized pension rules with all consequential increases. An expenditure of Rs20.958 billion was incurred during July 2019 to January 2020, against the total allocation of Rs33.075 billion for 2019-2020.

It has been estimated that additional budget of Rs4.17 billion will be required under the head "employees' retirement benefits-pension" during 2019-2020. Further, Railways maintained in the documents that fuel prices in the international market are continuously increasing.

Price of high-speed oil has increased by Rs15.79 (average) per litre. An expenditure of Rs12.292 billion was incurred during July 2019 to January 2020 against the total allocation of Rs17.522 billion. Due to increase in prices during 2019-2020, the fuel procurement plan has badly affected.

It has been estimated that an additional budget of Rs2.208 billion will be required at current rates of the HSD oil to meet the requirement of operation fuel during the current financial year. Pakistan Railways is a bulk purchase client of distribution companies over the country. The electricity per unit rates has been increased from Rs20.12 to Rs26.66 during the current financial year so far.

An expenditure of Rs1.74 billion was incurred during July 2019 to January 2020 against the total allocation of Rs2.1 billion. Thus, an additional budget of Rs1.224 billion will be required during the current financial year. As per earnings and expenditure, the provincial deficit from July 2019 to January 2020 has been worked out at Rs2.681 billion.

Total revenue earnings remained at Rs32.424 billion, subsidy released was Rs22.757 billion, and expenditure remained Rs57.855 billion during the first six months of the current financial year. In financial year 2018-2019, earnings of Pakistan Railways stood at Rs54.59 billion compared to Rs49.5 billion in 2017-2018, the highest revenue ever achieved by the department.