The International Monetary Fund (IMF) is unlikely to seek privatization of Pakistan Railways' (PR) during the negotiations for new bailout package, but may urge reforms, phasing out subsidy and encouraging private sector to enhance revenue, said former Finance Minister Dr Salman Shah.
"The IMF will ask the government about the reasons for the budget deficit, circular debt and subsidies to the State-Owned Entities (SOEs) and would recommend phasing them out to overcome economic challenges," said Shah while talking to Business Recorder.
He said IMF will seek reforms in Railways, which is currently getting around Rs 37 billion in subsidy annually as the government can no longer afford it from the budget; and recommend encouraging private sector in freight services, PRs main source of income. It is unlikely for the IMF team to seek privatization of PR with around 76,000 employees.
During the Article IV consultations and request for Extended Fund Facility (EFF) in 2013, the government had given the commitment to IMF to eliminate subsidy for PR. Further, the government had given the commitment to develop a comprehensive restructuring plan for PR by end-March 2014. In the 12th and final review under the extended arrangement, the Fund welcomed improvements in the PR revenue performance and the authorities' commitment to move forward with the restructuring plan.
Railways officials said the restructuring plan comprised improving freight and services, rationalizing tariffs, strengthening expenditure controls and governance. PR has already introduced a result-oriented restructuring plan, resulting in increased revenue and developed its infrastructure across the country.
"We will continue to implement our restructuring plan, including further improving freight and passenger services, increasing and diversifying revenues by actively participating in new ventures and strengthening the internal organization," the official added.
Aging as well as shortage of equipment, overstaffing, and large debts continue to weigh on PR operations. However, its revenue increased from Rs 18 billion in 2012-13 to Rs 50 billion in 2017-18 i.e. by 175 percent, mainly because of increasing the number of freight trains. Freight sector revenue which was Rs 1.93 billion in 2012-13 increased to Rs 20 billion by end 2017-18.
The carriage capacity has also increased from 1.016 million tons to 7.73 million tons during the last five years. The passenger sector revenue increased to Rs 26.355 billion in 2018 compared to Rs 14.520 billion during 2012-13.
The availability of operational coaches has increased from 972 in 2013 to 1248 in 2017-18 due to a higher outlay on up-grading coaches. For the first time 55 new freight specific locomotives of 4000 to 4500 HP have been added to the existing fleet.
Introduction of new passenger reservation system including e-ticketing for passengers and outsourcing of commercial management of passenger trains under Public Private Partnership (PPP) also resulted in generating additional revenue and curtailing expenditure.
Terminal facilities are being improved by introducing modern loading/unloading facilities to curtail loading/un- loading time. As a result of these initiatives 12 freight trains are now originating from Karachi Port against only one train per day in 2013.
Officials claimed that punctuality of passenger trains increased from 42 percent in 2013 to around 77 percent in 2018 and in some sectors around 90 percent. Further 1,055 acres of land has so far been retrieved from encroachers which was 3125 acres as on June 2013.