Privatisation can save Pakistan Railways

Published: January 12, 2012

I was recently discussing the dilapidated condition of our railways system with a friend when he suggested a similar, yet far more expansive solution to the problem; privatise the system completely. PHOTO: PPI

It seems that the damage done to the railways system by our lack of leadership and management has not crippled the institution just yet – the prime minister has just announced a business class service to be offered from February 3, 2012. This is not a novel idea, but a good one nonetheless. Why did this thought take so long to materialise? Considering that PPP supporters burnt down 130 carriages at the time of Benazir’s assassination, I am surprised that the government didn’t take notice of the situation earlier.

I was recently discussing the dilapidated condition of our railways system with a friend when he suggested a similar, yet far more expansive solution to the problem; privatise the system completely.

He based his idea on the success of the Daewoo Bus Service and it also got me thinking, why not?

Here are some basic facts regarding the railways system currently operating in Pakistan:

  • The first railways line was opened to the public in 1861 between Karachi and Kotri (169km of rail)
  • In 1886, there were already four different companies working on the lines in what is now Pakistan; the Scinde (Sindh) Railways, Indian Flotilla Company, Punjab Railway and Delhi Railways, which were later combined and became Pakistan Railways in 1947. This shows that the concept of privatising railways existed even then.
  • Over 65 million people use the railways system on an annual basis which contributes to 50% of the revenue for Pakistan Railways as passenger traffic.
  • Total length of the current railways system is 8,163km, with over 60 major stations,  junctions and five major routes:
  1. Peshawar-Karachi
  2. Peshawar-Quetta
  3. Lahore-Sialkot
  4. Lahore-Faisalabad
  5. Faisalabad-Khanewal

Future potentials include domestic expansion from:

  • Karachi-Gwadar
  • Quetta-Gwadar
  • Bostan-Zhob
  • Rawalpindi-Sost and
  •  International expansion which already includes the lines of:
  1. Zahedan to Quetta (linking Iran to Pakistan)
  2. Thar Express to Karachi and Lahore to Attari (connecting India to Pakistan)
  3. There were also proposed plans for linking China, Afghanistan and Turkey, which are all possible.

The concept of privatisation for the railways system was discussed in 2010, but the division was based on passengers, freight and manufacturing businesses. I believe what my friend was proposing was a further division within each section, especially for the passenger line, in order to create a sense of competition that would drive improvement.

Creating a sense of competition within each section leads not only to better services and improved infrastructure but also focuses on profitability which inevitably leads to an improved system as it is based on consumer satisfaction.

In order for this to happen, the government may need to do the following:

  • Offer three to four tenders for each of the major routes on a yearly contract – this would enable the control over a routes monopoly by one railways business and ensure that competition is encouraged.
  • The money received from the tenders should be used by the government to renovate each platform and bring it back to a respectable condition.
  • Invite tenders by service businesses to establish themselves at the platforms (such as restaurants, internet hubs, waiting lounges, business lounges, motels, etc)
  • Provide at least a five year tax holiday and another five year reduced tax subsidy to all final parties. This would encourage business investment into the railway infrastructure development.
  • Regulate pricing to ensure that the private sector is not taking undue advantage of the end consumer and the  network system.
  • Offer a dedicated police service for the entire railway system

The above mentioned points seem simple. Perhaps they even are. The only thing really lacking is honesty and the integrity to do good for the people who have voted the government in power. It would have been ideal if there was no need to privatise one of the most basic needs of the people, such as transportat, but unfortunately that is not possible with the current state of affairs. The best we can ensure is the continuation of the service at a reasonable rate.

So far the condition has gotten from bad to worse. With the announcement of the business service locomotive starting shortly, one wonders why we can’t offer something to the poor, the larger segment for whom the railways was and still is, the only form of travel across the country.

It seems that our government is so incompetent that they have resorted to foreign consultants to help resolve the railways issue. I can’t believe we didn’t have the brain power to come up with solutions ourselves. 170 million people in Pakistan, and we have to consult outsiders to find solutions.

Whatever the case, the current government can still save face and save the wreckage known as Pakistan Railways from becoming yesterday’s trash.

Adeel.Ansari

Adeel Ansari

Adeel Ansari moonlighted as an RJ on Cityfm89 (as Jellyman) but now works at Henkel after completing his MBA-Marketing from Lahore School of Economics and is currently settled in Dubai. He tweets as @Adeel_Ansari (twitter.com/Adeel_Ansari)

The views expressed by the writer and the reader comments do not necessarily reflect the views and policies of The Express Tribune.

  • http://www.pakistani-revival.blogspot.com Ovais

    I completely agree with u … atleast political empoloyees will be reduced .. but then would PPP willing to go against their jialays..Recommend

  • MalikMachine

    I also believe in Privatization….no enterprise should be owned by Governemnt as it gives rise to corruption and over staffing…..

    All advanced economies in the world have no Government influence on corporations…we need to adapt this model…..Recommend

  • http://convergence.pk Wasim H baig

    The key to railways is freight, and not passengers. I drove from Lahore to Karachi over the winter break (lovely highway, must do it again), and the route was packed with trucks carrying containers, this inspite of the embargo on NATO goods, which is another 300 containers a day. Quick fix: tax NATO for $2 billion (for the last 10 years), funnel $1 billion to fix railways, and $1 billion to fix the road damage, shift all the freight over to railways and automatically watch the situation improve. Unfortunately, bad governance and vested interests will not let this happen. Same is the case with PIA, PSO, Steel Mills.Recommend

  • Sajida

    Privatization failed in UK;but, has worked in Japan. How to avoid what happened in UK?Recommend

  • Haris Javed

    should the same idea be applied for PIA?Recommend

  • Nadir

    This is all very good, but as Wasim points out railways make money on freight not passengers. The National Logistics Cells has since the 1980s effectively monopolised freight movement across the country at the detriment of the railways, and as NLC is army run no one is going to take it on. The rot started decades ago, expecting to turn it around by some clever marketing techniques to get more bums in seats is not going to cover the high fixed cost of rail travel.Recommend

  • salman

    Interesting. But do u know how much land railways own?
    its the biggest land grabbed in pakistan. It may be a naive suggestion, but they can get back on their feet in no time if they just sold some extra land to public sectorRecommend

  • Hindu Indian

    I dont have much clarity on the business model used in Pakistan but i would like to suggest a more public option. Is there anything that stops the government from making the Railways public, issue stocks, i am sure that the Pakistani public would be interested in the stocks and this way the industry would make money and with the Railways going public the officials would be answerable to someone. Today the problem with us (Pakistanis and Indians) is that the officials of Government institutions are not answerable to anyone except the corrupt Politicians. So by making them answerable i am sure progress can be achieved, but then again nobody should expect miracles to happen overnightRecommend

  • Parvez

    When the sitting minister for railways and his political party has vested interest in road transportation how do you expect the railways to function. Recommend