Pakistan Institute of Development Economics

Discourse Vol 1, Issue 2
Pakistan Railways – From State Owned Enterprise To Business Model (Article)
Publication Year : 2022
Author: PIDE

Over the years SOE’s are repeatedly making billions of losses, sipping the taxpayers’ hard-earned income mercilessly. The increased reliance on subsidies in the current scenario is unsustainable for the government. The losses of the top ten loss-making SOEs like PIA, Pakistan Railways, power companies, and the National Highway Authority account for 90 percent of the total SOE losses. In PR it was estimated to a prodigious 144 billion PKR during FY 2015 – 2020.The primary focus should be to fix the huge leakages in these ten SOEs.

Despite these statistics, the PR Placed in the “Retain and Restructure “category after the State Owned Enterprises (SOE) triage exercise in March 2021. Deregulation, privatization and public private partnership (PPP) are the three main policy approaches to restructuring and reforming SOEs. Deregulation alone can increase the gross domestic product by 24 percent Qadir and Ullah; 2021. Privatization is expected to reduce the government footprint by 6 percent which is the root cause of low private investment. The government’s share in the transport and communication sector was calculated to be around 73 percent Haque, N. & Ullah, Raja. (2020).

The railways around the globe have been restructured in PPP mode. In 2011, the Infrastructure Project Development Facility (IPDF) and Pakistan Railways (PR) published preliminary information on a new Open Access Policy (OAP) for railways. The purpose of the policy was to attract private investment in locomotives, rolling stock, and new facilities for freight services. The OAP did not provide for overall open access for freight operators. Instead, it allows concession only for specific commodities and between specified origins and destinations (Box 3). Unfortunately, PR/MOR did not activate the concessions they had signed. The inability to completely implement the open-access plan which has been in practice for the last 183 years and faltering the process at the last minute indicates the gravity of political interference, the resistance within the PR to any change, the incompetence and non-existence of business ethics or model.

Discourse Vol 1, Issue 2
Pakistan Railways – From State Owned Enterprise To Business Model (Article)
Publication Year : 2022
Author: PIDE

Over the years SOE’s are repeatedly making billions of losses, sipping the taxpayers’ hard-earned income mercilessly. The increased reliance on subsidies in the current scenario is unsustainable for the government. The losses of the top ten loss-making SOEs like PIA, Pakistan Railways, power companies, and the National Highway Authority account for 90 percent of the total SOE losses. In PR it was estimated to a prodigious 144 billion PKR during FY 2015 – 2020.The primary focus should be to fix the huge leakages in these ten SOEs.

Despite these statistics, the PR Placed in the “Retain and Restructure “category after the State Owned Enterprises (SOE) triage exercise in March 2021. Deregulation, privatization and public private partnership (PPP) are the three main policy approaches to restructuring and reforming SOEs. Deregulation alone can increase the gross domestic product by 24 percent Qadir and Ullah; 2021. Privatization is expected to reduce the government footprint by 6 percent which is the root cause of low private investment. The government’s share in the transport and communication sector was calculated to be around 73 percent Haque, N. & Ullah, Raja. (2020).

The railways around the globe have been restructured in PPP mode. In 2011, the Infrastructure Project Development Facility (IPDF) and Pakistan Railways (PR) published preliminary information on a new Open Access Policy (OAP) for railways. The purpose of the policy was to attract private investment in locomotives, rolling stock, and new facilities for freight services. The OAP did not provide for overall open access for freight operators. Instead, it allows concession only for specific commodities and between specified origins and destinations (Box 3). Unfortunately, PR/MOR did not activate the concessions they had signed. The inability to completely implement the open-access plan which has been in practice for the last 183 years and faltering the process at the last minute indicates the gravity of political interference, the resistance within the PR to any change, the incompetence and non-existence of business ethics or model.