Pakistan Railways has incurred a staggering loss of over Rs55 billion during the fiscal year 2022-23. The losses were attributed to a combination of governance issues, financial mismanagement, and a lack of transparency, according to an audit conducted by the Auditor General of Pakistan (AGP).
The audit’s segregated analysis highlighted governance issues as a significant concern within the department, particularly in administration and the management of Public Sector Development Programme (PSDP) projects. These problems were deemed more severe than those related to risk management and controls.
One of the most glaring issues found in the audit was the non-recording of accrued liability on account of interest and exchange risk premium on foreign loans, which amounted to Rs29.35 billion. The report also revealed a loss of Rs19.80 billion due to potential revenue loss from project delays and non-adjustment of suspense balances amounting to Rs12.64 billion. Furthermore, the department overspent by Rs11.75 billion beyond the allocated budget, exacerbating the financial strain.
The failure to record accrued pension liabilities in the financial statements of Pakistan Railways resulted in an additional Rs8.25 billion loss. Contract awards at higher rates cost the department Rs6.96 billion, and the non-registration of Pakistan Railways Freight Transportation Company (PRFTC) with the Punjab Revenue Authority contributed to a loss of Rs7.92 billion. Non-operating track access agreements resulted in a further loss of Rs6.10 billion per annum, and a lack of fair competition and transparency in procurement cost the department Rs5.09 billion.
The audit report also revealed that the department suffered a loss of Rs5.05 billion due to the non-recovery of receivable bills. Delays in the finalization of bids caused an additional loss of Rs2.07 billion due to the devaluation of the local currency. Suspicious weighing practices concerning coal led to another Rs2.07 billion loss.
Continuing along the same lines, the department incurred a loss of Rs1.37 billion due to the non-recovery of PRFTC dues from Huaneng Shandong Ruyi, and an additional loss of Rs866.95 million was witnessed due to the non-disposal of scrap.
The report highlights the urgent need for systemic reforms within Pakistan Railways to address the governance, financial, and operational challenges that have contributed to these massive losses. Failure to do so could further undermine the sustainability of this vital transportation entity, which has long struggled with financial and management issues.
It’s concerning to hear about the significant loss Pak Railways incurred in FY23. Efficient transportation systems are vital for any country’s development. I hope the authorities can address the issues contributing to these losses and work towards a more sustainable and reliable railway system. Let’s hope for better financial outcomes in the future. 🚆 #PakRailways #InfrastructureMatters