Pakistan Railways (PR) requests a staggering 130% increase in procurement costs for 1,050 new bogies, from Rs31 billion in 2017 to Rs71 billion. This proposal has faced pushback from the ministries of finance and planning due to concerns over project timelines and financial feasibility.
Major Cost Increase Proposal
Pakistan Railways is aiming to increase the budget for purchasing 820 freight wagons and 230 passenger coaches significantly. The initial cost was Rs31 billion in 2017, but due to currency depreciation and changing specifications, the revised cost has soared to Rs70.97 billion. This request was recently presented to the Central Development Working Party (CDWP) but was deferred for further review.
Reasons for Cost Escalation
- Currency Depreciation: The value of the Pakistani Rupee has fallen from Rs104 to Rs285 against the US dollar since 2017.
- Project Delays: Repeated cancellations of bidding processes and the need for project reassessments under the China-Pakistan Economic Corridor (CPEC) have contributed to the increased costs.
- Increased Import Prices: The cost of imported components has risen by 15% over the past five years.
Despite already procuring 292 freight wagons and 78 passenger coaches, the remaining bogies are not expected to be delivered until June 2026.
Concerns from Financial Ministries
Both the Ministry of Finance and the Planning Ministry have raised objections to the proposed cost increase:
- Unrealistic Timelines: The Planning Ministry criticized PR for setting impractical project timelines, leading to significant delays and increased costs.
- Low Revenue Generation: Currently, Pakistan Railways handles only 20% of passenger traffic and 4% of freight, with the majority shifting to road transport. This inefficiency resulted in a loss of Rs55 billion in FY23.
The finance ministry has requested PR to develop a robust business plan to increase its share of national transport and recover new investments.
The Road Ahead for Pakistan Railways
In light of these challenges, PR must enhance its operational efficiency to improve service delivery. The aging rolling stock has been a major factor affecting performance, leading to the procurement of higher-capacity wagons and more powerful locomotives.
