“Freedom comes from strength and self-reliance” — Lisa Murkowski (American attorney and politician)
“Freedom comes from strength and self-reliance” — Lisa Murkowski (American attorney and politician)
With a sprawling 7,791-kilometer route, Pakistan stands as the second-largest rail network in South Asia. However, the perpetual decline in Pakistan Railways' managerial, financial, and operational facets over decades has been a cause for concern. Pakistan Railways have suffered massive losses year-on-year. In the fiscal year 2022-23 alone, the state-owned entity incurred a staggering loss of Rs55 billion, prompting the need for a strategic overhaul. Gross earnings of Pakistan Railways in recent years have reduced to alarming levels due to a variety of factors.
Despite government initiatives for privatization, restructuring, and major reforms, the desired improvements have been elusive. Currently, Pakistan has 466 operational locomotives, 16,159 freight wagons and 1,460 passenger coaches, which are highly deficient given the planned expansion of the railway network. One pivotal factor contributing to Railways' financial losses is the underutilization of dedicated facilities for manufacturing railway equipment such as carriages, wagons, locomotives and other rolling stock. Nonetheless, the optimal indigenous manufacturing has the potential to partly reverse the operational and financial decline of Pakistan Railways.
Underutilized Facilities
One of the core challenges lies in the underutilization of key manufacturing facilities, such as the Islamabad Carriage Factory and Pakistan Railways Locomotive Factory. These facilities, established through foreign collaborations, have not met their full potential. The Islamabad Carriage Factory, constructed in 1970 with global ALSTOM collaboration, has an annual capacity of manufacturing 120 railway coaches. However, from 1971 to 2015, it produced only 2,011 passenger coaches, operating at a meagre 37 percent capacity on average. The factory operates on a single shift basis, and its production capacity can be doubled if the factory runs on two shifts. It has dedicated manufacturing facilities and has a manpower strength of over one-thousand technical and semi-skilled staff.
Since the factory could not meet the demand, 2,020 coaches, as CBUs (completely built-up units), were imported from China during the period 2012-15. Under a similar contract valuing over Rs31 billion, 820 freight wagons are being imported from Jinan Railway Vehicles Equipment Co (China). Freight wagons consist of flat, open-top, and covered wagons, and brake vans. The first lot of 70 flat wagons was delivered in January 2023, followed by 130 wagons in March 2023. The remaining wagons and 20 brake vans are scheduled for delivery during early 2024, to be assembled at the Islamabad Carriage Factory.
Similarly, the Pakistan Railways Locomotive Factory, established in 1993 at Risalpur (Khyber Pakhtunkhwa), has struggled with low-capacity utilization, producing only 54 locomotives during the period 2003-2008, at an average of 10 locomotives per annum. The factory commenced production and assembly of diesel-electric locomotives of 2,000-HP under technology transfer arrangements with Hitachi (Japan). In subsequent years, technical collaboration was obtained from the OEMs (original equipment manufacturers) for local production and assembly of GE (USA) and Dalian (China) diesel-electric locomotives of 2,000-HP, and Ziyang (China) for 3,000-HP electric locomotives.
Capacity utilisation has been very low since its inception, never having achieved full capacity in a single year. Only five locomotives were assembled during the year 2014-15. Seemingly, there have been no major activities for production of locomotives at the factory since then. In spite of technology transfer arrangements with global manufacturers, the Pakistan Railways’ factories continue to rely heavily on imports. The Pakistan Railways Workshop at Lahore, also known as Moghalpura Workshop of colonial days, is essentially a rolling stock repair facility, spread over an area of 192 acres and having about 2,900 workforce. It is primarily engaged in repair, rehabilitation and recommissioning of railway locomotives and coaches. While the workshop has recently refurbished 34 outage locomotives, its potential for manufacturing new wagons is only now being realized under an approved project.
Current Challenges
Recent contracts, such as the $140-million deal with the Chinese, raise concerns about the nominal value addition in Pakistan's manufacturing process. In November 2021, Pakistan had signed a contract with CRRC Tangshan Co Ltd of China, manufacturers of locomotive and rolling stock, for import of 230 passenger coaches, under technology transfer arrangement. First batch of 46 passenger coaches (CBUs) arrived in Pakistan in November 2022. Remaining 184 coaches (passenger, luggage and brake vans) have been delivered in SKD (semi-knocked down) and CKD (completely knocked down) conditions for assembly at the Pakistan Railways’ manufacturing factories. So far, coaches have been assembled locally under the supervision of Chinese engineers. Large-scale imports of coach seats, handrails, and interiors, along with spare parts, highlight a crucial need for self-sufficiency.
Future Prospects
Despite the challenges, there is hope for revitalizing Pakistan Railways through optimal utilization of manufacturing facilities. The Ministry of Railways launched Pakistan Railways Vision 2026, which seeks to increase its share in Pakistan's transportation sector from existing 4 percent to 20 percent by 2026, using the $3.1 billion China–Pakistan Economic Corridor (CPEC) rail upgrade. The plan includes building new locomotives, development and improvement of current rail infrastructure, an increase in average train speed, improved on-time performance and expansion of passenger services. The first phase of the project was completed in 2017.
Nonetheless, a major amount is to be spent on procurement of some 3,000 locomotives and 13,700 carriages, phase-wise. However, until now, the other projects have not achieved further progress. The Railways was allocated Rs45 billion in the 2022-23 budget, along with an additional Rs32.6 billion under the Public Sector development Plan (PSDP), indicating a commitment to reversing the operational and financial decline. Strategic utilization of existing manufacturing capabilities for locomotives and carriages is essential for driving future growth and ensuring the efficiency of passenger and freight railway services.
Export Potential
Looking beyond domestic needs, Pakistan has the potential to export railway equipment. A precedent exists, as evidenced by the country exporting railway coaches and rolling stock valued at $30 million in August 2001. With a focus on meeting national demands and improving indigenous manufacturing capabilities, there is a prospect of exporting railway equipment to neighbouring countries like Sri Lanka and Bangladesh in the future.
Conclusion
In conclusion, the indigenous manufacturing of railway equipment holds the key to Pakistan Railways' revival. By overcoming the historical underutilization of manufacturing facilities and fostering self-reliance, the railway sector can not only reverse its financial and operational decline but also position itself for sustainable growth and potential exports. The government's commitment to allocating substantial funds indicates a positive step towards realizing this vision.
The writer is retired chairman of the State Engineering Corporation
