ISLAMABAD: Pakistan Railways has achieved an “improved operating ratio” through a strategic reform initiative that emphasizes cost-cutting, optimizing train loads, outsourcing commercial operations for both passenger and freight services, and tapping into the freight market.
Currently, Pakistan Railways operates 98 daily passenger services across various routes nationwide, according to a senior official from the Ministry of Railways speaking to state-run news agency APP.
The official explained that the concepts of profit and loss are tied to the corporate structure, and the profitability of a railroad is determined by its operating ratio. An operating ratio below 100 percent indicates financial viability, and Pakistan Railways has attained an operating ratio of approximately 98 percent for the financial year 2023-24.
He noted that Pakistan Railways faces a unique challenge, as 57 percent of its passenger trains operate under the Public Service Obligation (PSO) to meet transportation needs in remote areas, resulting in significant operating costs that the organization must absorb.
The official further highlighted that the commitment to providing public services in underprivileged and remote regions, without corresponding subsidies, has strained its financial health.
In response to inquiries, he stated that expenditures for regular salaries, pensions, and operational fuel account for about 89 percent of total expenses, leaving only 11 percent of the budget for utilities, repairs, and maintenance of operational assets.
Additionally, Pakistan Railways is required to adhere to the federal government’s pay and pension structure, with rapidly increasing pension costs posing a significant challenge to its performance.
He clarified that while Pakistan Railways covers its operating expenses—including salaries and fuel—from its revenues, pensions are funded by the federal government through annual grants. Therefore, he argued that Pakistan Railways should not be classified as a loss-making entity.
