Options for

Restructuring SOE
Monopoly - Railways
Faseeh Sohail - Ahsan Imran - Umair Shahab - Faheel Anjum
 Services Based Industry

 Established by British in Subcontinent

(Indo-Pak region)

About  Freight & Passenger Services

Pakistan Railways carries 65 million passengers
Pak. annually

Railway (that makes up to 50% to total revenue)

 Mail Delivery Services
(operates about 228 mails)
 State Owned Enterprises
 A business enterprise where the government has
significant control through full majority or
significant minority ownership
SOE  A legal entity, created by a government in order
to partake in commercial activities

 SOEs are majorly responsible for economic

condition of a state, since they are under
government’s control
Restructuring Railway
 THE ERA OF 1970 TO 1990
 Significant shift in transport volumes away from
railways to road and air transport in this period.
 Loss-making state owned railways into stand-alone
enterprises.

Background
OBJECTIVES FOR RESTRUCTURING
 Reduce the chronic financial deficits.
 Lower the Cost and Prices.
 Improve service quality.
 Continuous Loss Consumer Mismanagement
Dissatisfaction

Why
Restructure? Technical
Maintenance
Proper Check &
Balance
Demotivated
Labor

Corruption
 Current Structure

VERTICAL INTEGRATION SEPARATE INTEGRATION

CORPORATE
GOVERNANCE OPTIONS CODE OF CONDUCT

CHINA-PAKISTAN
PRIVATIZATION ECONOMIC CORRIDOR
VERTICAL INTEGRATION SEPARATE INTEGRATION

Overall Reduced Cost Increased Cost

Teamwork & Innovation Enhanced Focus on
Individual Departments
Better Networking Better Public Services
Combined Hierarchy Departmental Hierarchy
Intra-Model Competition Intra-Rail Competition
 The goal is to retain ownership
while allowing the entity to operate A collection of mechanisms, processes and
efficiently and competitively
relations by which corporations are controlled
and operated

Railway processes and objectives can be set and

Corporate pursued in the context of market environment
Governance
When there are issues (political / social) in
management and maintaining economical
standards.
 Accountability
- A clear and effective mandate of accountability of
Railway organization is of immense importance.

 Fairness
- The decisions and operations are based on principles
instead of arbitrary practices

- Corporate governance framework lays out all such

principles and values that a company need to pursue

 Transparency Objectives
- Transparency of information and data can inform
public debate and exert pressure on decisions
makers

 Independence
- The independence of commercial entities is
essential to carry out decisions in a timely and
appropriate way
 Capacity Building
 Directors and staff members of upper management
should be encouraged to have certification under an
appropriate training / education program from an institute
Code of Directors of SOEs
Conduct  Initiate performance contracting between the government
(as a shareholder) and Board of Directors and CEO (as
management) to provide an objective framework for
assessment of performance and clarity on roles between
stake holders.
 ADVANTAGES
Increased Profits
Enhanced Efficiency
Least Political Interference
Elimination of Debt
Privatization Proper Check & Balance
Accountability

DRAWBACKS
Raised Prices, Increased Taxes, Downsizing of Labor, Exploitation from other
Private Sectors
  China seems to be very interested in using
Pakistan to keep on improving itself
economically and is also involved in Pakistan’s
development

C.P.E.C  Pakistan Railways contract with China National

Machinery Import and Export Corporation
 40 passenger coaches have been received, and
105 “were” scheduled to be assembled in
Pakistan Railways' carriage factory.
 COUNTRIES
 China
 Bangladesh
 India

Examples of
Successful
Restructure REGIONS
 Combodia
 Viet Nam
 Russian Federation
 PAKISTAN BEFORE RESTRUCTURE
 Average GDP 4.7%
 Customer dissatisfaction
 Mismanagement

Conclusion
PAKISTAN AFTER RESTRUCTURE
 Average GDP 5.4%
 Customer Satisfaction
 Technology Improvement
 Labor Efficiency
Thank You !