ISLAMABAD: Amid strong opposition from the Ministry of Finance and Ministry of Planning, Pakistan Railways (PR) will increase the procurement cost of around 1,050 bogies by 130% to Rs 71 billion, mainly due to currency depreciation and changes in specifications. I’m looking for something.
Pakistan Railways’ plea to increase the procurement cost of 820 freight cars and 230 passenger coaches to Rs 70.97 billion from Rs 31 billion in 2017 was submitted to the Central Development Working Party (CDWP) a few days ago, but was submitted at the last minute. It was postponed. .
If the proposal is approved on technical grounds by the CDWP, the Executive Committee of the National Economic Council (Ecnec) may consider its formal approval.
As of June 30, approximately 292 of the 820 freight cars and 78 of the 230 passenger cars have already been procured through two Chinese contractors, and the remaining bogies are scheduled to be delivered by June 30, 2026. .
‘Unrealistic timeframe’ for railways blamed for pushing costs to Rs 71 billion
PR attributes the soaring costs to a variety of factors, including the exchange rate rise from 104 rupees to 285 rupees to the dollar in 2017, and a reassessment of projects related to the renovation of ML-1 (Karachi-Peshawar route). It is cited that bid results were frequently canceled for reasons. China-Pakistan Economic Corridor (CPEC).
The Ministry of Finance objected to the exchange rate and demanded that the cost estimate be based on 278 rupees to the dollar.
The contract for 820 freight cars was ultimately awarded to China’s M/S Baotou Beiping Zhuangye for $41.64 million on March 30, 2022, and the contract for 230 passenger bogies was awarded on October 29, 2021. Awarded to CRRC Tangshan Company, China. 148.89 million dollars.
PR also attributed some of the cost increases to a 15% increase in import trade prices for onboard parts, taxes, freight and other local charges over five years.
The 820 wagon portion of the project was initiated to transport coal from the port to the power plants, specifically the Sahiwal coal-fired power project that was being developed at the time. The duration of the target project was designed so that the power plant would be synchronized with the rail project upon completion.
The Ministry of Planning expressed concern that although the power plant has been in operation for a number of years, the rail project is still unfinished and should therefore be reconsidered as it “would otherwise be a huge liability” .
The Planning Commission also pointed out that Pakistan Railways had done little to develop realistic project durations and costs. It was observed that the procurement process took almost three years and after the completion of the bidding process, it took another year to award the order to the manufacturing company.
“During this period, PR is also facing financial challenges as it requires 15% upfront payment to move forward after bid approval.As per the quarterly based fund release mechanism, this fund will be released after two quarters. All these factors are responsible for the delay in project completion,” the Planning Commission said, adding that despite Pakistan Railways having the potential to increase revenue, procurement and manufacturing have so far been delayed. He lamented that no serious efforts were being made to fund the project.
The committee calls for serious efforts to reduce PR losses and utilize human resources to effectively increase revenue. Such projects should be implemented through those funds. The government has earmarked only Rs 6.16 billion for public sector development programs in FY25.
The Ministry of Finance also said that only 20% of the total passenger traffic and 4% of the freight traffic from Karachi to the hinterland is carried out through the railway system, leaving the remaining 80% of the passenger traffic and 96% of the freight traffic. He pointed out with concern that this was being done via road due to poor road conditions. Performance of Pakistan Railways, which faced losses of Rs 55 billion in FY23.
The ministry requested the public relations agency to develop a business plan to expand the national passenger and freight transport share in order to recover new investments.
A spokesperson said the main reason for the company’s performance is that the aging of its freight fleet is having a negative impact on the efficiency of its freight train services, so it is investing in larger-capacity freight cars and more powerful locomotives to improve service delivery. He said that this was an issue due to the procurement process.
Published at Dawn on October 29, 2024
