ISLAMABAD – Rejecting the Pakistan Railways (PR) demand of providing financial assistance of Rs 5 billion, the government has assured providing guarantee for obtaining loan from a consortium of local banks. An official source in the Ministry of Finance said the government had turned down the request for direct financing from the State Bank of Pakistan, adding that the Railway authorities were instructed to move a summary after which the government would provide guarantee for arranging financing from banks. The Ministry of Railways was seeking urgent financial assistance for over hauling the non-functional locomotives.
The PR is in dire straits as out of a 500 locomotives only 227 are in a running condition. It was presently running only four freight trains daily and if the shortage of locomotives is overcome, the number can reach 16 to 17. The source said the government had already talked with some of the banks and development financial institutions for setting up a consortium. They agreed to the proposal provided the government gave the guarantee. The Ministry of Railways was asked to move the summary by Friday to the Ministry of Finance but it was not received till Saturday. The Ministry of Finance had on Friday released Rs 2 billion on emergency basis to the cash-strapped Railway, enabling it to clear long standing dues against the oil marketing companies.
The financial crunch had led to the stoppage of fuel supply by the Pakistan State Oil (PSO) resulting in cancellation or delay of train service. The state-owned PSO had stopped supplying diesel after the arrears soared to Rs 900 million. Similarly, the losses of PR were on the rise especially because of increase in oil prices, lack of locomotives and high administrative expenditures amidst raise in the salary and pension of the employees. The federal cabinet had approved an Rs 11.5 billion PR specific package in December last year, but the govt failed to release the amount because of financial constraints.
It is worth mentioning that the government had allocated Rs 13.6 billion for the Railway under the PSDP, but later the amount was reduced to Rs 7.3 billion. The international donor agencies have suggested to the government to privatise some of the sections of the Railways.
However, President Asif Ali Zardari in his recent presidential address to the Parliament had categorically said that under the privatisation policy of the coalition government, the outright sale of the national assets and institutions would not be allowed. The policy of public-private partnership would be pursued and shares would be off loaded on the local stock exchanges, he added.
