Pakistan railways’ total losses touch $6 billion; political neglect, unprofessional heads, mismanagement behind slide
Once a lifeline for the people of the subcontinent, the part of railways that went to Pakistan now stares at a bleak future
Once a lifeline for the people of the subcontinent, the part of railways that went to Pakistan now stares at a bleak future. Having faced a deficit of over $250 million in 2021, and total losses crossing $6 billion, Pakistan Railways has become a burden the government could hardly afford for long—at least in its present form.
Behind the ruins lie the decades of neglect, unprofessional appointments—in a sector that is multi-technical—and, financial and administrative mismanagement. Its contribution today to the country’s transportation sector is just 4 percent. Regular deficit led to the persistent deterioration of its services—with trains on many routes stopped and the removal of air conditioning from others.
Once operating with over 120,000 employees, today it has just around 67,000. The total salaries and pensions to retirees—over 115,000 in numbers as per a recent report by the Railways—accounts for over $350 million annually. It not only faces a huge cash crunch but also insufficient locomotives and functional coaches. And importantly, it misses the much-needed modernization, overhaul which could make it financially sustainable.
Around 2015, the government presented a future roadmap, involving its modernization and overhauling. It aimed for achieving 20 percent stakes—from the existing four percent—in the country’s transportation sector. However, the main hurdle remains: who will finance it?
Railways modernization was envisaged under China’s flagship China-Pakistan Economic Corridor (CPEC) project. It included laying down new tracks on the ML-1 rail line, connecting Karachi to Peshwar via Lahore with 1872km of track. China, which had initially assured funding over $6 billion for the project, now looks hesitant, citing doubts over Pakistan's ability to repay the loans.
However, funding is only a part of the problem. Other administrative issues regarding technical and efficient appointments remain to be solved at the Pakistan government’s end. Railway Minister Azam Khan Swati recently told The Express Tribune that he was working to solve the deficit issue—critics, however, take his assurance with a pinch of salt.
“The government is also set to announce a package for the rehabilitation of the railways soon,” he said, adding, “the restoration of railways is one of the government's top priorities.” However, amidst the economic crisis when the government has been seeking external funding from IMF, it remains doubtful. The IMF has explicitly asked the government to cut its expenditure.
In recent years, Pakistan has been stressing increasing regional connectivity, which would give a boost the country’s economy because of its unique positioning. Transnational networks, including railways, are among potential projects.
Railway Minister Swati termed the newly inaugurated Islamabad-Tehran-Istanbul freight train network as a "game-changer" for the region. He also hoped to extend the route further to Europe.