Pakistan Railways is a department of the Government of Pakistan (GOP).

The network has 7,791 route km, 559 stations and it has an annual revenue of around Rs.20 Billion (2007-2008). Pakistan Railways came into existence under a different name on 13 May 1861, when Kotri and Karachi two stations 169 km. a part were linked by rail. In 1947, it was named as Northwestern Railways, had 11,088 routes Km of which 3043 were transferred to India. Leaving 8,045 Km to Pakistan. In 1961, it was named as Pakistan Western Railway and in 1974 as Pakistan Railways. Operational Structure Ministry of Railway is responsible for overall control of Pakistan Railways as well as to guide the overall policy. There are four (4) Directorates in this PR namely Administrative Directorate, Technical Directorate, Planning Directorate, and Finance Directorate. The a. b. c. General Federal following officers General Government also report directly to the Secretary Railways:(Operations) and of Services Railways

Manager Manager/Manufacture Inspector

Railway Board is the highest body for technical matters of the Railways, Secretary, Ministry of Railways is also ex-officio Chairman of the Railway Board. Pakistan Railways at this time is a vertically integrated organization and has four business units. Pakistan Railways is headed by a General Manager, who is the Chief Executive Officer assisted by four Addl. General Managers, namely, Infrastructure Business Unit, Passenger Business Unit, Freight Business Unit and Manufacturing and Services Unit that looks after: Concrete Sleeper Factories, (CSF), and Carriage Factory. Islamabad, (CFI), Locomotive Factory, Risalpur, Rehabilitation Project, Medical and Health Service. Railway Construction Company (RAILCOP), Pakistan Railway Advisory & Consultancy Services (PRACS) and Educational Facilities).

Human Resources Pakistan Railways has about 90,000 employees consisting of staff and officers as of 2008). 71% of the total employees are working in Civil, Mechanical and Transportation departments. All the hierarchy positions are held by graduate Engineers. Organization In the late 1990s, the Government of Pakistan considered selling the airline to the private sector due to the persistent losses suffered by the airline.The general supervision and management of affairs of Pakistan Railways is vested in the Railway Board, which has been reconstituted. The new Railway Board consists of Chairman and five Members out of which three are from the private sector. Secretary to the Government of Pakistan, Ministry of Railways is the ex-officio Chairman of Railway Board and the General Manager, Railways is the Chief Executive Officer. Organization Structure of Pakistan Railways is of functional type, headed by GM and assisted by four Addl. General Managers. The New Organization Structure This Organizational structure designed to create a commercial environment is now in the process Financial Performance of of Pakistan Railways for 2006-07 implementation. and 2007-08:

Comparison between Revenue and Expenses:The total revenue of the Pakistan Railway in 2006-07 was 11,674 and the total expenditure of the Pakistan railway was 22,556 and if we deduct revenue from the expenditure we found that the net profit or loss was (10891).

2006-07

2007-08(in million Rupees)

A. Revenue 1. Total Revenue 11,674 11,346

B. Expenditure 1. Working expenses 20,268 269 21,916 249 4,364 2,115 (8,671) 1,834 1,961 (12,466)

2. Improvement & Welfare Expenses 3. Pensions 4. Depreciation Surplus/deficit Interest on Foreign loans Interest on Over draft Net Profit and Loss 4,067 2,115 (7,527) 2,021 1,343 (10,891)

PRESENT SITUATION OF PAKISTAN RAILWAYS AND ITS ASSETS. It is now almost certain that the earlier plan to privatize Railways has been shelved by the Military government which instead wants to revamp the system, rid it from rampant corruption and control its losses. The federal government has reportedly approved a rehabilitation plan to be launched under the control and supervision of the Army. One of the important policy decisions taken at the joint meeting of the National Security Council and the Federal Cabinet, presided over by the Chief Executive, General Pervez Musharraf, last week related to the revival of the defunct Railway Board and its merger with the Ministry of Railways, which is now headed by a new secretary, who is a retired Lieutenant General of the Army, who will simultaneously hold charges as Chairman of the Railway Board. This decision seemingly marked a reversal in the process of privatisation of Pakistan Railways which was initiated by the previous government back in 1998 when on August 30, the 137-year old Pakistan Railways was divided into three separate and independent units, each to be headed by a Managing Director. The three units were described as the Infrastructure Unit, Freight, Service Unit and Passenger Service unit, which have been operating independently over the last one year and reports indicated that the Freight Unit had registered some increase in its profit earnings during this period through better utilization of the available number of wagons. Thus the entire process aimed at privatization of the railways has come to a halt as a result of the latest cabinet decision, indicating that the present government is giving preference to retention of Pakistan Railways as a single entity in the public sector and that new efforts would be directed towards the goal of making Pakistan Railways a viable and profit earning concern. Lt.Gen. Javed Ashraf Qazi, new Secretary of Railway Ministry and Chairman Railway Board, while briefing the newsmen said that the objective of the Plan which has been dully approved by the National Security and the Federal Cabinet at a joint meeting held for this purpose include restructuring of railways emergency repair measures, rehabilitation and modernization steps and reduction of debt burden on the

department. Lieutenant General Qazi regretted that PR hasan overdraft of Rs. 19billion for which the department is paying Rs. 3 billion interest annually. While the operational deficit is Rs. 2.6 billion every year. As such, the total annual deficit stands at Rs. 9 billion. He said that with the approval of the federal cabinet, the Ministry of Railways has constituted a committee to work out a strategy to deal with the surplus staff. Till then, General Qazi said, no retrenchment would be made in the Pakistan Railways. At present, non technical staffincluding clerks, workers and peonsare in surplus, while the technical staff is insufficient. "We have chalked out a plan to train the non technical staff and accommodate them in technical sections to overcome the deficiency there. The three-month training programme would soon start in Lahore. The railway department has been divided into two unitsoperations and technical. These units will be headed by general managers. One will run the mail operation while the other will look into the task of manufacturing and services. The task of the general managers would be to work for the rehabilitation of the department and earn money to revive its economic position. It may be recalled that Pakistan Railways has been invariably reporting losses in its operations during the last 52 years despite repeated efforts on the part of the various governments in the past to inject dynamism, both administratively and financially, in its working, but all such efforts seemingly failed to produce the desired results. The organization which is purely commercial in its functions has failed to bridge the gap in its expenditure and income. In fact, the gap has been widening without any sign of a change for the better. As a result, the federal government as the owner of the railways, has to meet the large deficits from its meager financial resources. Instead of fixing the dismal affairs in Pakistan Railways, the Zia-ul-Haq government had opted for a quick fix by launching the National Logistic Cell through the Army resources, instead of restructuring and downsizing the overstaffed monopoly. It was due to the inefficiency in its working and constant deficit in its balance sheet that the railways lost a substantial share in the freight and passenger movement market of the country over the last five decades and consequently the privately ownedbus services and trucking companies have been rapidly gaining ground in the

transport system. As things stand, public confidence in the railways is at an all-time low. The Pakistan Railways suffered a loss of over Rs. 6 billion in 1997-98 as compared to Rs. 1.8 billion in 1990-91. The spiralling losses are due to a number of factors, the principal one being a progressive decline in the operational efficiency and reliability of its passenger and freight services, to say nothing of convenience and comfort of travel. As a result, there has been a sharp fall in passenger tarffic and freight transported over the years and a rise in expenditures at the same time. The railways have been neglected by successive governments which preferred to invest in road and air transport instead. This neglect has had very far-reaching consequences. The travails of train travellers are endless. From hassles in getting tickets, to the deplorable condition of trains and the absence of any mechanism to check and rectify the many malpractices, irregularities and deficiencies that afflict the whole of spectrum of train travel. As the army takes stock of the situation, a good idea would be to set up a committee comprising experts from the field of railways to come up with a set of recommendations of both short-and long-term nature so that the process of revitalizing the railways can be started on a sound footing and in right earnest. Under the ongoing restructuring process, the railways has already shut down over 200 train routes out of a total of 324 and intends to sack 30,000 employees. To carry this process through to its logical end calls for an unbending will, patience and perseverance. The turnaround in the railways is imperative as this organization should serve as the pivot of the national transport system and an arterial channel of economic activity in the country. And it will got to the credit of the army if it is able to restore the railways to its pristine position so that it plays its crucial role in the composite sector of communications and economic activity KarachiFederal Minister for Pakistan Railways (PR) Ghulam Ahmed Bilour Sunday said Pakistan Railways was passing through a financial crunch and even unable to pay salaries to the army of employees.

Talking these

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Bilour

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departmentsPakistan Railways was also passing through era of hardships however despite harsh facts all efforts were made to broaden the Railways network. He said that during past eras Pakistan Railways were adversely neglected which led to present situation however incumbent government was not disappointed and was chalking out long termed strategies which would not only mend the past discrepancies but would also develop the PR and it would be proved a beneficial department soon. The Minister said that a request has been made to friend country China for cooperation in development of Railways which has been accepted and a positive response was hoped. In cooperation with China a dual track Railway track would be laid between Khanjab-Islamabad and Karachi-Tourkham which would not only help in easing the traveling between these areas but would also open new avenues of development in trade and tourism. He said that though lack of funds was creating hurdles in the way of development of Railways but China and other countries would be consulted to resolve this problem. Bilour claimed that railway departments across the globe except India Railways were going in loss. Transportation Sector including Railways The domestic transportation system in Pakistan primarily comprises of the Road, Rail and Air. The growing economy is imposing strains on the transport sector. Road Sector The total roads of all types are estimated at 258,350 kms. Of which high type roads are 176,587 km. and low type roads are 81,761 kms. The highest density remains on the Grand Trunk Road running from Peshawar to Karachi. The first segment of an alternate motorway form Islamabad to Lahore and Islamabad to Peshawar has been completed. With other sections to be constructed shortly. The national highway carries 96 percent of the freight and 91 percent of passenger traffic. Railway Sector

Railway sector in Pakistan has not maintained its position in the transport sector. The market share of Pakistan Railways kept on declining with the passage of time. For example, annual passenger volume carried by Pakistan Railways in late 1970s was approx. 145 million, which has come down to 59 million in 1992/93. The freight business was of PR was 15 million tons in late 1960s but has come down to 7 million tons. Roads have steadily become the more preferred form of transportation. An example of PRs declining market share is that it is moving only 11% of total petroleum products and 2% of the total containers. A more professionally managed and independent railways have immense growth potential. Air Sector Pakistan International Airlines (PIA), the national carrier, is carrying the bulk of the air travel services within the country. With deregulation of the air sector in the 90s, three other private airlines have entered the domestic market and international market. Regulatory Environment The Railway Regulatory Framework is now under preparation.

The broad objectives of the proposed Regulatory Policy are:

To regulate the establishment, working, and provision of railway services in Pakistan To promote and protect the interests of users of railway services To promote competition in the provision of railway services To encourage investment in railway infrastructure and rolling stock by the private sector and To promote efficiency and economy in the provision of railway services To resolve disputes arising in the industry.

The Regulator is expected to have three major functions:

Overseeing the rules and conditions establishing access to infrastructure and approving access contracts Licensing private train operations and resolving disputes of regulatory nature Managing Public Service Obligations for the Military and other Passenger traffic.

Current Status The unbundling of Pakistan Railways into core business units (Infrastructure, Freight and Passenger) is under process

Managing Directors (MD) for the three core business units Infrastructure, Freight and Passenger have been appointed. A notification for the operation of the core business units and delegation of powers to the MDs has been issued. Operation of the three units has commenced from September 1998.

Accounting separation and segregation of assets is being formalised. Non-core assets will be evaluated and prepared to be sold through open auction. Regulatory environment is being established.

The Likely Offer Sale/Concession of three core business units of Pakistan Railways (PR) i.e. Infrastructure, Freight Railway Transfer Development of PR Equipment/sections land of properties for (e.g. preservation and and Railway of Passenger other Ancillary Stations in Railway units properties. facilities. major cities) heritage. Non-core units: Locomotive factory, Sleeper factories, Carriage Factory etc.

Key Contacts Director Privatisation General Commission

5-A EAC

Constitution

Avenue Building Pakistan

Islamabad Telephone: 920 5369 51)

(92-51) Facsimile : (92920 3076, (92-51) 921 1692

Email:info@privatisation.gov .pk