ISLAMABAD: Pakistan Railways' (PR) deficit widened to around Rs 45 billion in FY 2019-20 compared to Rs 33 billion in 2018-19 owing to shortfall in revenue, increases in fuel and electricity prices, pays and pensions as well as some of the newly-launched passenger trains running in losses, it is learnt.

Official sources revealed to Business Recorder that PR has also missed the revenue target of Rs 58 billion set for 2019-20 against Rs 54 billion for the same period of 2018-19, as according to Railways minister Rs 1 billion loss was incurred per week due to lockdown.

PR was able to bring down its losses to Rs32.769 billion in 2018-19 as compared to Rs36.622 billion in FY 2017-18, mainly because of increasing its revenue from Rs 49 billion to Rs 54 billion during this period. However, during the financial year 2019-20, Railways revenue is estimated to be around Rs 55 billion, but expenditures have risen resulting in increase in deficit.

Railways, despite getting a subsidy of Rs 39 billion in the budget 2019-20, demanded around Rs 8 billion additional to meet pension, fuel and utilities liabilities.

According to the budget documents 2020-21, government has earmarked a grant of Rs 40 billion for PR for the fiscal year 2020-21 to meet its losses against Rs 39 billion allocated for 2019-20, which was later revised upward to Rs 45 billion.

The government had approved the budget estimates 2019-20 to the tune of Rs 97 billion for PR including Rs 58 billion revenue receipts and Rs 39 billion in subsidy to defray salaries, pensions and other expenses of railway's employees and operations.

In addition Rs 100 million were allocated for renovation of railways police buildings financed by American Embassy which made the allocation to the tune of over Rs 97 billion, said a senior Railways official.

However, Railways faced financial crunch due to increase in pension, expenses, fuel oil and increase in per unit rate of electricity. Due to the policy of liberalization of pension rules adopted Jan 1, 2015 and decision for restoration of commuted value of pension July 1, 2015, the burden on Railways finances is continuously increasing. It was estimated that additional budget of Rs 4.170 billion was required under the head 'employees' retirement benefits-pension during 2019-20.

Operating cost of PR was around Rs 22.77 billion during 2019-20. Further, Railways spent Rs 33.4 billion in terms of employees' retirement benefits and around Rs 17 billion to pay employee's salaries. An additional Rs 12.083 billion was budgeted for allowance during the last financial year.

PR is a bulk purchase client of distribution companies in the country. The electricity unit rates increased on average from Rs 20.12 per unit to Rs 26.66 per unit during the FY 2019-20. Additional budget of around Rs 1.224 billion was required to meet the expenses, the official added.

According to the Economic Survey 2019-20, during the first eight months of fiscal year 2020 (July-February), gross earnings grew by 8.4 percent and amounted to Rs 36.916 billion compared to Rs 34.066 billion during the same period of 2019 (July-Feb).

However, during July-Feb fiscal year 2020, the number of carried passengers decreased to 39.4 million against 39.9 million during the corresponding period last year, representing a decline of 1.20 percent. Passenger traffic (km million), freight carried (tonnes million), and freight (tonnes km million) declined by 3.54 percent, 0.56 percent and 0.07 percent respectively.

The government has budgeted total of Rs 123.3 billion for PR for fiscal year 2020-21 against Rs 113 billion budgeted for 2019-20, showing an increase of around 8 percent.

Under the Public Sector Development Programme (PSDP), the govt has earmarked Rs 24 billion for the current fiscal year against Rs 16 billion earmarked for the last fiscal year. Further Rs 99.3 billion has been earmarked to defray salaries and other expenses of railway's employees.

The Railways has a huge employees-related expenditure amounting to Rs 99.3 billion for fiscal year 2020-21 against Rs 97 billion for 2019-20.

Operating cost for 2020-21 is estimated at Rs 24.22 billion against the revised Rs 22.77 billion for last fiscal year. Railways will spend Rs 35.2 billion in terms of employees' retirement benefits against Rs 33.37 billion for the current fiscal year which was later revised to Rs 35.05 billion.

Pakistan Railways will have to pay Rs 182 million for transfers and postings of its employees. Further, Rs 12.426 billion has been budgeted for allowance for fiscal year 2020-21 against Rs 12.083 billion for last fiscal year.

Copyright Business Recorder, 2020