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Privatisation of public transport sector

It has been reported that Pakistan Railways (PR) will soon be inviting the private sector to operate another 22 passengers trains not generating enough revenue to meet their variable costs under the state-run management. It will be a public-private partnership, wherein, the private sector will be awarded commercial management and passenger facilitation for the 22 passenger trains.

Railway network is one of the greatest asset Pakistan acquired from the British empire, which by 1909 made functional in India one of the largest railway network in the world. Over the subsequent years the network grew with connectivity to all parts of Indo-Pak subcontinent. With this connectivity began the multiple social and economic integration of the people of the region. Upon partition in 1947, Pakistan acquired a well-managed and functional railway system with a railway track covering 8,124 route km connecting Peshawar to Karachi and Karachi to Quetta and beyond into Zahidan-Iran. India acquired 55,000 route km of railway network.

Up to late 60s, Pakistan Railways functioned as a profitable and well-managed institution with trains operating punctually on time providing great transportation service to the people and transportation of goods, which was rated as the most reliable and profitable unit of Pakistan Railways. Thereafter, like other public-managed entities, PR suffered decline on account of institutionalised corruption, nepotism and inefficiency.

Whereas, India well managed its part of the inheritance and today Indian Railways is reported to be self-sustaining and transporting 8,424 billion passengers and 1,050 million tons of freight per year. The trains operate punctually on time, service is good and is the largest source of public transportation in addition to the mass transit metro services in Kolkata, Delhi, Bangalore and Mumbai.

Pakistan Railways, Pakistan Steel, PIA and the public power sector entities are the four main public sector enterprises sustaining their existence on massive government subsidies thereby bleeding country’s economy. In spite of tall promises made by the previous governments and the present one none has been able to achieve a turnaround or even an iota of improvement. The issues are much bigger than their competence and will to manage the complex issues.

Much of the issues are vested interest-driven. World-wide, the transportation of goods on rail is the most efficient and cost-effective mode. In the early years, it was also so in Pakistan. Subsequently, the transporters of goods on road managed well to sideline and marginalise transportation on rail at the cost of public and national interest.

In early 1990s, with the influx of Independent Power Producers (IPPs) the govt invited proposals from the private sector for the transportation of fuel oil from Karachi port to the doorsteps of the IPPs by availing on rental the PR rail track while the locomotives and oil wagons provided by the private investor. Number of investors with global experience in the field expressed interest but the project was shelved for reasons best known to the government, thereby depriving great revenue for PR without any investment and availability of cheap oil to IPPs free from pilferage. The influence of the transporters of oil on road again prevailed over the expense of the national interests.

Under similar discussions now is the transportation of coal on rail to feed the coal-fired IPP being the favourite choice of power generation of the government. With the present pathetic state of PR this is not going to work nor any private investor would like to once again burn his finger.

Pakistan Railways, supported by world-class foreign expertise, established in early 70s passenger carriage manufacturing factory at Islamabad and locomotive refurbishment factory at Risalpur. They both worked well for some years to add significant local value addition to the rolling stock of PR. But, subsequently PR opted to purchase rolling stocks from China on turnkey basis while ignoring the said two facilities to upgrade its rolling stocks. This purchased lot failed to provide the required service. Tragically today the facilities at Islamabad and Risalpur are almost abandoned.

Same is the fate of public transport system in cities. Just a few years back the city of Karachi imported green buses, which were seen on roads for few months. But, the influence of private transporters on road prevailed. The green buses are now all parked in the junkyard with their tyres and batteries stolen. What we have on Karachi roads are depleted mini-buses in which the pubic is transported under most deplorable and pathetic conditions.

The government of Japan dedicated a very soft loan of around $1 billion to realign and revamp the abandoned Karachi circular railway. It is reported that due to years of feet dragging by the Sindh government, Japan is reconsidering its generous support. The silence of the Sindh government and its incompetence to provide a decent mode of transport to its people is unpardonable.

The city of Lahore, however, managed very well to provide a decent and reliable public transport system to its people. The government of Punjab demonstrated courage and skills to loop-in all the privately-operated mini vans and buses under the influence of Lahore Transport Authority, which regulates their fares, routes and safety of passengers. Further, the establishment of Lahore metro bus service is a cost-effective replacement of metro rail system providing nearly an equivalent decent transport facility to the middle-class and poor segment of people alike. It’s a rewarding sight to see the poor lot of the country travelling decently in air-conditioned buses in parallel to the country’s elite travelling in their limousines.

It is best that public transport is operated by the public sector. But, in Pakistan it is not working. Pakistan Railways, over years of poor governance and vested external influences, has no chance to be restored as an efficient and self-sustaining organisation under public sector. The government lacks competence to manage such complex issues. It best be privatised while safeguarding the interests of workers and the public.

Same is the case with PIA; once the pride and flag carrier of Pakistan is now the laughing stock of the world. An airline which opts to delay its departure on the behest of late check-in VIPs, well demonstrates the mindset of the airline management. It is being retained in its pathetic state only to cater to the needs of the vested interest and some politicians. Many attempts have been made for the turnaround of the organisation. Each attempt makes things more worse. It too needs to be de-invested or privatised while taking care of the workers and public interests.

It’s about time that the government in power demonstrates courage and wisdom to decide the fate of ailing public sector organisation which, in their present state, may at best serve the vested interests but in no way the public interests.

(The writer is Chairman Avant Ventures & former President OICCI & ABB-Asea Brown Boverie)

Farhat Ali, "Privatisation of public transport sector," Business recorder. 2015-01-14.
Keywords: Political science , Political issues , Political system , Privatization process , Transport sector , Pakistan railways , Economic crisis , Economic integration , Privatization-Pakistan