Feb 15, 2009

Railways in financial crisis

: The Pakistan Railways (PR) does not have enough funds to buy fuel to keep trains running beyond Sunday, officials told Dawn on Saturday.We only have Rs869.38 million for payment to the Pakistan State Oil for procuring high-speed diesel and TBN-13, but this amount will not be sufficient even for trains operations on Sunday, a senior railways official said.The PR had been allocated Rs7.2 billion for fuel purchase.Our estimate (submitted to the finance ministry) was prepared on the basis of the prevailing price for diesel in May and June in 2008. The fuel price increased exorbitantly in September and subsequent months. We prepared a revised demand along with justifications to the ministry during November last year and have since sent at least two reminders, the official said.The revised demand of Rs12,151.836 million included Rs4,951.836 million for fuel purchases.The official said the ministry had allowed the railways to spend up to Rs1,000 million a month.Meanwhile, the railways’ financial adviser and chief accounts officer (FA&CAO) asked all accounts and finance officers not to entertain any bill or payments except salary and allowances, pensions, utility bills or buying fuel and lubricants.This amount is not even sufficient to ensure a smooth supply of fuel for rail operations. There is a need to allow railways’ officials to clear PSO bills beyond allocated funds without interruption till additional funds, amounting to Rs4,951.836 million under the operational fuel head, were released upon receipt of funds from the finance division to avoid any interruption in train operations, he said.However, a senior audit officer argued that the increase in fuel price was not the only factor affecting railways’ finances.Irregular and/or extra consumption of fuel is a major factor, which is why fuel remained second highest component of operating expenses. The railways spent Rs6.567 billion or 32.45 per cent of the total operating expenses for 2006-07.Unnecessary delays cost a lot of fuel: Locomotives held up at stations needlessly burn fuel, besides causing train delays. Locomotives stalled in yards and train delays resulted in the loss of 770,700 minutes between May 2007 and April 2008, causing a loss of Rs776,865,600 because of staff negligence.When passenger or freight trains are configured in yards, they are left unattended for hours; Operating mismanagement causes unnecessary fuel consumption of 338,680 litres of fuel, valuing Rs13,547,200 at the rate of Rs40 per litre from Jan 1 to June 9 this year, said the audit officer.

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