Pakistan Railways is grappling with significant challenges, including over 1,100 cases of alleged corruption, theft, and illegal recruitments reported over the past five years. 

Between 2012 and 2023, a staggering 1,157 train accidents were recorded, raising serious safety concerns. The national entity has also incurred cumulative losses of Rs400 billion during this period, with its expenses now exceeding twice its income. 

Key factors contributing to these losses include poor management, political interference, corruption, outdated infrastructure, and limited freight operations. The Pakistan Tehreek-e-Insaf (PTI) government’s tenure was particularly detrimental for Pakistan Railways, with annual deficits averaging Rs41 billion.

 Similarly, during the Pakistan People’s Party and Pakistan Muslim League-Nawaz tenures, annual losses averaged Rs28 billion and Rs32 billion, respectively. 

Over the past 13 years, the government has injected Rs660 billion from the national treasury to cover railway deficits. Last year’s devastating floods further worsened the situation, damaging tracks and bridges, halting 28 train services, and adding Rs11 billion to the losses. 

The financial strain is compounded by a bloated workforce, with Pakistan Railways spending Rs5.5 billion monthly on salaries for 55,000 employees and 116,000 retirees. Biometric verification for 15,000 pensioners remains incomplete, leading to millions being paid to ghost pensioners. With 68 percent of its Rs120 billion budget allocated to salaries and pensions, the entity has insufficient funds for critical infrastructure upgrades. 

Despite these challenges, there was a glimmer of progress in 2023, with revenue increasing by Rs12 billion, reaching Rs63 billion — marking a 251 percent rise compared to the previous year. Pakistan Railways has outsourced nine trains to private companies and is exploring further outsourcing to improve profitability. However, the complete replacement of tracks is estimated to cost between $9 billion and $11 billion. 

Also read: Pakistan Railways records Rs33 billion in revenue over five months

Corruption remains a persistent issue, with 596 employees facing inquiries in the last decade. Although Pakistan Railways owns 168,858 acres of land, it generates only Rs3.5 billion annually from this asset. Additionally, land worth Rs25 billion is illegally occupied, while financial constraints have led to the closure of many stations and services. 

Mismanagement in freight operations, particularly in coal transportation, has resulted in billions of rupees in penalties. Procurement delays, substandard materials, and uncollected bills have further exacerbated losses. Governance issues, highlighted in a forensic report by the Auditor General, include arbitrary freight rate hikes, unexplained profits, and the influence of a powerful “diesel lobby,” which sidelined electric trains and doubled annual diesel costs to Rs18 billion. 

Safety remains a critical concern, with 478 accidents involving vehicles at level crossings recorded in recent years. Train punctuality is alarmingly low, with mail and express trains running on time only 11 to 53 percent of the time. 

Encroachments on railway land persist. During Ghulam Ahmad Bilour’s tenure, over 2,500 acres were recovered in a single year, but only 1,787 acres were reclaimed in the nine years under subsequent ministers. Freight inefficiencies, including the failure to meet coal transport targets, have also caused significant financial setbacks. 

Since its inception in 1947, Pakistan Railways has remained state-owned. Currently, the entity lacks a dedicated federal minister, with its affairs overseen directly by the prime minister. This year, the railways is projected to lose Rs50 to Rs55 billion. 

Comparisons with neighboring India highlight Pakistan’s failure to modernize and improve its railway system since partition. While the railways play a vital role in national transportation, chronic corruption, inefficiency, and lack of strategic planning continue to hinder progress, leaving the future of Pakistan Railways uncertain. 

VITAL ROLE OF THE NATIONAL RAIL SYSTEM
Pakistan Railways Secretary Syed Mazhar Ali Shah highlighted the vital role of the national rail system in bolstering the economy and strengthening strategic defense. He noted that freight operations form the backbone of the railways, saving 88% of defense-related transportation costs. Additionally, 75% of train services cater to underserved regions like Balochistan and Khyber Pakhtunkhwa, ensuring connectivity for lower-income areas. Despite significant challenges such as climate change and flooding, efforts are underway to make the system more profitable and enhance services. 

Shah explained that the government is aligning rail operations with market demands and prioritizing new infrastructure projects. For instance, railway lines are being developed to connect Gwadar’s mineral resources and other strategic locations to key ports. Over the past two years, the railways have significantly reduced operational spending, cutting costs from Rs198 to Rs98 for every Rs100 earned. Modernization efforts are being supported by private investment, with technology integration playing a key role. 

However, the financial strain is evident. “A large portion of the budget is allocated to pensions (95 per cent), fuel (20 per cent), and other operational expenses, leaving just 5 per cent for infrastructure improvements. Pension delays have created additional financial pressures, while outdated infrastructure remains a critical issue — 67 per cent of the network is in poor condition. The devastating 2022 floods further damaged railways, but repairs were completed without external funding. The ML-1 project, covering 75% of operations, is expected to begin soon, promising transformative improvements,” he said

Shah said that freight operations have seen substantial progress, with train capacity doubling from 20 tons to 40 tons over the past 40 years, and total freight capacity increasing from 800 tons to 2,400 tons per train. New initiatives, such as the Thar project, aim to boost annual freight capacity to 12-14 million tons. “Anti-theft measures have been strengthened with enhanced collaboration between railway police and management,” he said. 

PENSION LIABILITIES
Shah said that pension liabilities have surged from Rs12 billion to Rs62 billion. Nonetheless, cost-saving initiatives have shown promise. “A new fuel system with PSO has reduced costs by 10-15 per cent, saving billions annually. Electricity consumption has dropped from 155 million units per year to 88 million, with plans to further reduce it to below 60 million units next year. Digitization efforts have also resulted in workforce optimization, with 15,000 job cuts already implemented and further reductions planned,” he said. 

Railways own 168,000 acres of land, 86 per cent of which is operational. He said that efforts are under way to reclaim 8-9 per cent of encroached land, with local officials tasked with removing illegal structures near stations and tracks. Railway police are being equipped with modern technology to improve enforcement and efficiency. 

The railways secretary said that while rail travel is 62 times safer than road travel, accident statistics remain concerning due to the comprehensive categorization of 14 incident types. Unauthorised crossings account for 37 per cent of accidents, a figure expected to decline with the completion of the ML-1 project, which will introduce gated crossings and flyovers, he said. 

“Although privatisation is not being considered, outsourcing operations has proven effective in boosting revenue. Eleven trains have already been outsourced, with plans to expand this model further to enhance profitability, Shah said. 

Nauman Quddus and Tariq Wasim contributed reporting