Pakistan Railways

Revitalization
CHALLENGES AND
RESPONSE

OBJECIVES

Introduction
Importance of Railways and its Decline
Problems Faced to Pakistan Railways
Causes of decline
How to fix it ?
Conclusion

Introduction
Pakistan Railways, lifeline of the country, is a

national state-run transport service. Among the

means of transportation railways are the cheapest
and safest mode for passengers and goods. It also
helps in growth of economy for the country.
It is under the administration of federal government
and its head quarter is in Lahore. It is an important
source of transportation throughout Pakistan. It
carries millions of passengers throughout the
country. It used to carry huge freight in Pakistan.

Introduction
This cheap and safe mode for passengers is now

facing a number of issues.

A number of services of Pakistan Railways have been
cancelled, suspended or terminated and many more
will be suspended in near future because of
mismanagement and shortage of locomotives, fuel
and money.
The chapter of all major services, from Lahore to
Karachi, has been closed. It is pertinent to mention
that all AC services have been stopped.

Introduction
The incompetent administration has failed to attain

locomotives from any quarter of the world.

Passengers are suffering due to mismanagement of
administration. Pakistan Railways decision to
suspend goods train service due to severe shortage of
locomotives and fuel is another blow to this
organization.
It is now basically financially bankrupt organization.
In other words it is on the verge of financial collapse.

Introduction
The political interference, nepotism, corruption, poor

maintenance of tracks & bridges and mismanagement in

almost every field are the major causes of failure of
Pakistan Railways.
Pakistan Railways purchased 69 completely built
locomotive units from China under 2003 agreement.
These are about 37% cheaper than the European
locomotives but considered to be faulty.
It is stated that 32 of these have already been scrapped.
Dong Fang Electric Corporation has been severely
criticized for producing low quality locomotives.

Introduction
Naturally trains are too late and passengers can be

seen sitting at platforms with their luggage. A

number of trains lack facility of light at nights
because of the failure of the generators and ill
attitude of management.
There are complaints that reservation is confirmed
after receiving bribe of hundred or more rupees by
passengers. Pakistan Railways is no more the best
choice to travel for the passengers.

Decline of Pakistan Railway

This public state enterprise is also the largest civil

employer in the country.

Over the years, lack of attention, poor policies,
increasing expenditures, misappropriation of funds,
nepotism and most recently, the floods have left the
Railways with huge deficits running in billions of
rupees.
Till the 1970s, Pakistan Railways was run by an
autonomous four-member policy forming Railway
Board which constituted a Member Traffic, Member
Mechanical, Member Civil and Member Finance.

Decline of Pakistan Railway

In 1990, the government appointed an officer from

the Civil Services of Pakistan chairman and from

then on there has been a rapid decline not only in
performance but also the balance sheet of the
organization.
Till 1990, the carriage factory in Islamabad was
exporting freight wagons and coaches to Sri Lanka
and Bangladesh, in addition to meeting local
requirements.

Decline of Pakistan Railway

Rather than augmenting this facility, the lure of

kickbacks has resulted in its virtual shut down and

orders were placed for import of carriages.
Although Moghalpura has facility to produce High
Capacity (HC) wagons, the same were imported from
China.
These imported wagons have the handicap that they
cannot work on branch lines because of axle load
limitations.

Problems Faced to Pakistan Railways

Railways are suffering huge losses for maintaining

lines whose service has not been done.

Railways are operating at low rates. A flexible policy

for rates and fare requires to be adopted whereby

freight rates could be varied according to the type of
commodities

Problems Faced to Pakistan Railways

The industrial units of railways are running at a loss.

The locomotive factory, sleeper factories and the

carriage factory as well as the other large
manufacturing units of railways need to be converted
into autonomous corporations.

The operational efficiency of the railways is very low.

The overall efficiency of the railways requires to be

improved through better managerial and operational
techniques.

Problems Faced to Pakistan Railways

The bulk of railways earnings are drawn from freight

services which are not being accorded the priority

they deserve.
Good traffic need to be accorded higher priority in

the assigning of locomotive power relative to

passenger services, particularly on the branch lines.

Causes of Decline
There are various reasons of the decline of the

Pakistan railway. They are categorized as:

1. Political causes
2. Technical causes
3. Managerial cause

Political Causes
Institutional dichotomy

Governance Issues
Corruption

Institutional Dichotomy
Instead of a commercial organization, became a

bureaucratic organization where rules and

procedures count more than end results.
Direct interference of bureaucrats in the purely

technical issues always leads to ineffective service

delivery.

Governance Issues
Running a commercial organization with political

considerations cannot yield profits, just losses.

Posting/ transfers made on political basis which

affects the operational efficiency and employees

morale.

Corruption
Corruption is the biggest problem

Pakistan Railways is facing today.

A government spokesman said
that the Federal Minister Cabinet
approved Rs.10.1 billion in August
2011 for PR to upgrade equipment
but only Rs.1 billion has utilized in
PRs concern.
It is due to the no check and
balance in Pakistan railway

Technical Causes
Shortage of Locomotives:
The Pakistan Railways has a total of 546 locomotives
but only 290 are on track while the rest are out of
order. Similarly, 70 per cent carriages are out of
service.
Currently only 58 locomotives are in working
conditions and needs consistent repair and
maintenance.
This is a major cause of the crisis of Pakistan Railway
in revenue generation

Technical Causes
Bunged Supply of Fuel:
This problem began from January 2011 when a
Pakistan Railway was unable to pay Rs.700 million to
PSO and in consequences PSO stopped the supply of
fuel to Pakistan Railway.
According to a senior officer at Railways
Headquarter 30 freight trains had to be stationed in
yards.

Managerial Causes

Decrease in Revenues:
Increased Costs:
Consumer Dissatisfaction:
Underinvestment

Decrease in revenues
Constant fall in earnings of the Pakistan Railways has been

the prime reason for the continuous losses it is suffering.

This in turn is due to three major reasons
Reduction in its train operations either because of shortage

of locomotives and passenger bogies

Prices of oil are increase but Pakistan railway not increase

the prices
Corruption is the third major reason for the revenues
falling sort of the targets fixed annually

Increased Costs
lack of proper checks and balances create loopholes for

corruption even in the presence of best legal

framework and institutional mechanism
Pakistan railway has 90,000 employees which are

more than required

out of 90,000 employees 01 locomotive has a burden of

1,516 employees other than the operational cost

Underinvestment
After 1973 Pakistan Railways' budget was amalgamated with the national

budget with the result that the profit they earned was diverted to other
heads, leaving less and less for its maintenance, expansion and
improvement.
On the other hand, the Government spent three times more on road

sector. It was this combination of neglect to railways and preference to

roads, which is the root cause of the present malady of Pakistan
Railways.
Ministry of Railways ,which is responsible for providing funds for the

maintenance and development of the provision of the railway network

has no long-term framework for capital support to perform these roles.

Consumer Dissatisfaction
There is no time management due to which consumer is

not satisfy.
Most of the complaints are about extremely low quality of

services provided.
Disrespectful attitudes of the employees towards the

passengers

Strategic Objectives
Helping directly to increase Pakistan's growth rate

Providing safe, modern, convenient and comfortable mode of

transport for the public at affordable prices

Becoming hub of transport connectivity

National integration by providing the nation a symbol and a

vehicle of national unity

Institutional Restructuring
Finalize the national transport policy with aim and

objectives
It will give the direction to the transport sector

It will also end the unnecessary competition

Restructuring of governance mechanism

After the finalization of a transport policy, finalize and

promulgate new legal framework

Establish Railway Regulatory Authority (RRA).
Let the Ministry be responsible for policy formulation

Corporatize PR and establish it as Pakistan Railways

Corporation (PRC)

Financial Restructuring
Resolve the issue of social obligations of the state

vs. commercial expectations from PR

If Pakistan Railways have to be run as a

government department.
Salaries, pension, operational maintenance and

developmental
expenditure should be considered as public
expenditure

Eradicate Corruption
Political corruption.
Financial corruption.
Right use of budget.

Weaknesses
Rapidly depleting assets ;rolling stock, telecommunications

and signaling networks.

Despite being a commercial organization, it is being run as a

government department, having public sector procedures

and culture

Limited number of individual freight customers and

commodities

Political necessity to operate even those services which can

never cover their costs

Weaknesses
Extensive network, to maintain which cannot be

commercially viable in the face of tough competition

from road

Overstaffing in certain categories, while understaffing in

critical areas.

Poor MIS and financial reporting system needed for a

modern, commercial organization

Poor connectivity with other modes of transport to make

it a part of multi-modal transport system

Opportunities
Increasing passenger and freight traffic due to

increasing population and prosperity

Increased demand for cross border regional linkages

Global preference for multi-modal transport in which

rail is becoming dominant

Growing concerns/awareness about environmental

issues can force policy makers to give more importance

to railways

Opportunities

Greater cost effectiveness of railways as compared to other

modes of transport

Improved road network in remote areas-a blessing in disguise

for stopping uneconomical train operations without much
inconvenience for the public.

Development and commercialization of railway property not

needed for operations

Growing importance and acceptance of Public Private

Partnership (PPP) along with emergence of strong private
sector can bring the needed financing and skills and
management through out sourcing

Threats
Continued efficiency improvements in road sector along

with improved road network can give tough competition to

railways

Improved service by road transport firms can be a

challenge

Premature and ill planned privatization can bring ruins

Claims of the provincial governments on its land can stall

any efforts to modernize it by commercialization of its

lands not needed

Challenges
1.how to increase the profitability of Pakistan Railways by

improving its operational efficiency and reducing its costs

2.how to gain consumer loyalty by offering quality services at

affordable prices without adversely affecting its profitability

3.how to modernize Pakistan railways at a speed and cost

which is realistic yet enough to keep it relevant in the rapidly

globalizing world

4.how to stop attrition of essential staff and attract the best

talent through proper incentives and rewards

1.Institutional Restructuring
Finalize the national transport policy lying in the ministry of

communications for years, setting out aims and objectives for

transport as a whole.
Every mode of transport should know where they stand in the

overall national transport perspective

It will not only give the direction to the transport sector but will

also encourage private sector to come forward, in a mutually

consistent and competitively neutral way
It will also end the unnecessary competition among the four modes

of transportation and force them to go for a national multi-modal

transport network

2.Restructuring governance mechanism

After the finalization of a cogent overall national transport

policy, finalize and promulgate new legal framework for

Pakistan Railways
It should envision an active participation of private sector

in the rail sector

Establish Railway Regulatory Authority (RRA) so that the

multi-functional role of Ministry as administrator,

operator, regulator is segregated

2.Restructuring of governance mechanism

Let the Ministry be responsible only for policy

formulation, assisted by a high-powered railway advisory

board

Chief Executive Officer (CEO), assisted by a technical

committee consisting of senior railway officers, will look

after the operational aspects

Corporatize PR and establish it as Pakistan Railways

Corporation (PRC) consisting of independent

subsidiaries/companies grouped together on functional
basis and operating on commercial basis as opposed to
Government Department

3.Financial Restructuring
Resolve the issue of social obligations of the state vs commercial expectations

from PR.

If the state wants to run certain loss making train services for strategic/social

considerations, let her compensate the PR for the loss thus incurred as it
used to do in early 1990s.

In fact the bulk of Indian Railways profit comprises the compensation paid to

it by the government for operating loss making trains

If Pakistan Railways have to be run as a government department then it

should be treated as such in terms of revenues it earns and expenditures it

incurs.

Salaries, pension, operational ,maintenance and developmental expenditure

should be considered as public expenditure and not as loss which is what in

normal discourse is being stated. Similarly its loan liabilities be paid by the
state and not be treated as loss

Investment
Pakistan railways needs

massive investment.
Providing budget on

time.
Need investment funds

even privatize it

Recent Steps of Improvement

Corruption control
Removal of nepotistic persons
Timing and Scheduling
Decreasing the fairs

Conclusion
Keeping in view the strategic and commercial importance of an efficiently run

railways as well as social obligations of the state to provide affordable and

cost effective mode of transportation to the public, Pakistan railways should
be given due importance

National transportation policy should be finalized as early as possible so that

the funds allocated for transportation sector could be judiciously distributed

among different modes of transportation

Pakistan railways should be run on purely commercial considerations and

across the board subsidy needs to be replaced with targeted relief to

passengers with limited means,

Outsourcing of operations, corporatization of its entities with subsequent

privatization and a strict accountability regime are some of the other essential
measures for effective service delivery

Thank
s

PAKISTAN RAILWAYS

History
The idea of a rail network was first

thought of in 1847.
On May 13th, 1861 with the help of
Sir Henry Edward Frere the
first railway line was opened to the
public, between Karachi (city) and
Kotri, with a total distance of 105
miles (169 km).

INTRODUCTION
State own rail transport service
Head quarter in Lahore
Stretched over 8000 km
Important mode of transport
Administer under federal Govt,

ministry of railways

Ministry of Railway
Khawaja Saad Rafique is a Federal Minister of

Railways nowadays.

Decline Of Pakistan Railways

Pakistan Railways is not only the cheapest

yet safest mode of travel.

Over the years, lack of attention, poor policies, increasing

expenditures, and most recently, the floods have left the

Railways with huge deficits running in billions of rupees

Current prepared position

Faces shortage of Rs 26252.315 Millions
Shortage of locomotives
No luggage trains
Half of locomotives are out of order
Communication system is out dated
Track is over aged
Borrowed 40 billion from state bank
Paying 4.6 billion as a interest to State Bank of

Pakistan.
Revenue declining repeatedly

PR COOPERATION WITH
CHINA
China is actively involved in the development of

Pakistan Railways for the past five years

China is to export 69 modern locomotive engines to
Pakistan to modernize Pakistan's railway fleet.
The first 15 engines will be manufactured in China
and the remainder will be assembled in Pakistan,
with spare parts and technology provided by China.

COMPETITORS OF RAILWAYS
CNG Buses,
Daewoo Express,
Bilal Travels,
Khan Brothers,
Skyways,
Niazi express.

RAILWAYS
Time is important to the customers.
The seat reservation system should be made online.
The first line staff should be trained.
Railways service center should be restarted.
Proper information should be provided to the

customers.
Railway stations should be clean.

Revenue vs Expenditure
The major losses faced by the Pakistan

Railways today are a direct result of decreasing

revenues with increased expenditures.
The expenditure recently crossed Rs.53 billion
in one year out of which Rs.20 billion were
allocated for salaries and pensions.
The revenues are dwindling to about Rs.23
billion per year.
Revenue share for freight trains has declined
from 40 percent to 25 percent as a direct result
of neglecting this cheap mode of transportation

Disasters
Nature has not been too kind to

Pakistan Railways either.

According to the National Disaster Management

Authority, the recent floods have caused a loss of Rs.6.7

billion to the railway network as several hundred
kilometres of lines were washed away.

STRATEGIES FOR
TURNAROUND
GOALS

Ensure availability of sufficient railway

engines
To ensure that railway trains leave/arrive
at the station at listed time
Ensure proper maintenance of engines
Utilize cheap coal-driven engines instead
of expensive diesel driven engines

Condition Of Employees
Pakistan Railways has about 90,000

employees consisting of staff and officers as

of 2008. which is more than required.
Employees are taking salaries without
working and sitting idle at home.
More than Rs.20 billion is allocated for
salaries and pensions
Employees have very strong unions so it is
difficult for Government to fired them

Privatization Of Railway
The Finance Division of GoP has proposed

the privatization of Pakistan Railway due to

the increasing budget shortage and poor
performance of Pakistan Railways since last
many years
I as a citizen of Pakistan think that
privatization of Pakistan railway is good for
railway

future GOALS
Goal 1

Repair old engines at railway workshops

Import new engines from china

Import new engines from USA

Goal 2
Task the station managers to start train on

time
Conduct study to determine proper time

duration for each time route.

GOAL 3

Training workshops to enhance capacity of

Pak railway engineers and technicians

Routine maintenance schedules to be strictly

followed
Purchased required railway spare part from

open market (locally)

GOAL 4

Reduce the number of cargo train

Repair passenger coaches in workshop
Purchase passenger coaches from china
Old coal-fire railway engines refurbished and utilized

in on short routs

possibility REPORT FOR future GOALS

Goal 1
Pak railway is facing financial crisis, no new imports
are force able in future
only repair can made locally at Pak railway

workshops

GOAL 2

Disciplining the station passengers

can enhance efficiency in timing

Good maintenance, done locally,

can ensure zero breaks down

GOAL 3

Routine training and refresher

courses are possible

Railways workshops to produce

spare parts

RECOMMENDATIONS
Railway should treat customer in a

respectful manner
Trains should depart on time
On the long routes the number of
stations should be reduced
The security system should be
better

PAKISTAN RAILWAYS

INTRODUCTION
State own rail transport service
Head quarter in Lahore
Stretched over 8000 km
Important mode of transport
Administer under federal Govt, ministry of railways
Vertically integrated organization

ORGANIZATIONAL STRUCTURE

PEST ANALYSIS

SWOT ANALYSIS

Current operational position

Faces deficit of Rs 26252.315 Millions
Shortage of locomotives
No freight trains
Half of locomotives are out of order
Communication system is out dated
Track is over aged
Borrowed 40 billion from state bank
Paying 4.6 billion as a interest to SBP
Revenue declining consecutively

PR COOPERATION WITH CHINA

China is actively involved in the development of

Pakistan Railways for the past five years

China is to export 69 modern locomotive engines
to Pakistan to modernize Pakistan's railway fleet.
the first 15 engines will be manufactured in China
and the remainder will be assembled in Pakistan,
with spare parts and technology provided by
China.

COMPETITORS OF RAILWAYS
CNG Buses
Daewoo Express,
Kohistan,
Khan Brothers,
Skyways and
Niazi express

RESTRUCTURING OF PAKISTAN RAILWAYS

Time is important to the customers

The seat reservation system should be made online
The first line staff should be trained
Railways service center should be initiated
Proper information should be provided to the

customers
Railway stations should be clean

STRATEGIES FOR TURNAROUND

GOALS

Ensure availability of sufficient railway engines

To ensure that railway trains leave/arrive at the station at
listed time
Ensure proper maintenance of engines
Ensure availability of sufficient passenger coaches
Utilize cheap coal-driven engines instead of expensive diesel
driven engines

PROPOSED GOALS
Goal 1

Repair old engines at railway workshops

Import new engines from china

Import new engines from USA

Goal 2
Task the station managers to start train on time
Conduct study to determine appropriate time

duration for each time route

GOAL 3

Training workshops to enhance capacity of Pak

railway engineers and technicians

Routine maintenance schedules to be strictly

followed
Purchased required railway spare part from open

market (domestically)

GOAL 4

Reduce the number of cargo train

Repair passenger coaches in workshop
Purchase passenger coaches from china
Old coal-fire railway engines refurbished and utilized

in on short routs

FEASIBILITY REPORT FOR PROPOSED GOALS

Goal 1
Pak railway is facing financial crunch, no new
imports are force able in future
only repair can made locally at Pak railway

workshops

GOAL 2

Disciplining the station passengers can enhance

efficiency in timing
Good maintenance, done locally, can ensure zero

breaks down

GOAL 3

Routine training and refresher courses are feasible

Railways workshops to produce spare parts

GOAL 4

Good trains are major cost earner therefore they

cannot be reduced beyond a certain level

No foreign purchases feasible
Unfeasible too costly to convert diesel engine to coal

head railway engine

RECOMMENDATIONS
Pakistan Railway requires a radical restructuring
Strong leadership at the helm of affairs is also

required
Railway should treat customer in a respectful
manner
Trains should depart on time
On the long routes the number of stations should be
reduced
The security system should be better