Road map for the Revival of Rail Sector in Pakistan

Railway is the premier mode of land transport. It is considered safe, efficient, sustainable and cost effective mode of transport. In terms of land intake, fuel efficiency, passenger safety, heavy and long haulage, it is established through various studies that railway has considerable advantage over road transport. High-speed trains have successfully proven their utility over airlines for a distances ranging from 500 to 1200 km. On some routes, Railways actually beat the maritime transportation both in terms of time and cost.

It is in this backdrop that there have been considerable investments in railways in late 20^th and early 21^st century. The sector has been completely revamped in Europe, Japan, and China with entirely different rules of the games and business models. USA, which ignored rail sector since World War 2 is displaying renewed commitment to invest in railways in order to create a credible mix of different modes of transportation.

In Pakistan, railways are witnessing a systemic decline since 1980s. There have been catastrophic accidents since 1990s, 2000s and 2010s with hundreds of passengers losing their lives. However, even such horrific accidents failed to raise the conscience of those at the helm of affairs. In railways, despite loud talks about reforms and improvements, there was never a serious, well-thought and profound attempt for reforming the sector to make it safe, efficient and reliable.

Why Railways?

Railways are environment friendly mode of transport. In terms of land use, it is 4 to 6 times more efficient than roads. In terms of million tons carbon emissions (mtCO2e) it has decisive advantages. A 2016 study published by Department of Transport in UK found that mtCO2e of Railways was 2 millions tones compared to 70 million tones of road and 35 million tones of aviation.

Transport sector consumes 1/3^rd of energy demands, 2/3^rd of global oil demand and 1/4^th of global carbon dioxide emissions. Therefore, it is imperative that transport mix must be changed to meet the standards of emissions set by United Nations. Railways have considerable advantage over other modes of transport in long distances and heavy hauls vis-à-vis climate sustainability.

Railway is by far safest mode of surface transportation. In terms of billion passenger kilometers for single fatality, road is the least safe as there is one fatality every 2.31 billion passenger kilometers (pkms), while in railways this ratio is 6.41 billion pkms. Only aviation beats this by 9.90 billion pkms. The safety of high speed trains which are competitors of air industry for medium and long distance (800 to 1200 km) is almost as good as aviation industry but HSR emit nearly 10 times less CO2 compared to an aircraft.

It is in this framework that there is renewed interest in the revival of railway sector all over the world. Railway provides the most reliable mix in terms of safety, reliability and climate sustainability. All over the world, governments, policy makers and environment activists are lobbying to fund the railways. However, with this improved interest, there is an equally pressing need for railways to be financially viable, technologically advanced and organizationally efficient. In all major countries, railway sector have gone through substantial transformation in last few decades in terms of technology, regulations, organizational structures and business model.

In Pakistan, Pakistan Railways (PR) enjoyed monopoly since partition. The internal thinking of PR has always been in favor of maintaining the existing scenario as it favors their comfort zone. In the process, rail sector, which was once an integral component of economy, has been gradually reduced into insignificance. The horrific safety profile of PR has further eroded public confidence in the capability of PR.

An Overview of Financially Viable Railways

In order to learn lessons, it is important to have a look at the railways, which are performing far better in terms of revenue generation to have an idea about the structure of those railways.

Deutsche Bahn ($51.4 billion)

It is a German railway company which employs around 3,10,000 people in 130 countries, operates a network of 33,488 kms, and has 5700 train stations over the system. It has the distinction of carrying 80,000 containers between Germany and China in 2017 on the world’s longest railway route so far. DB is a joint stock company with state of Germany being the single shareholder. The company owns several other subsidiary companies each running the sector in the respective domains such as local passengers business, long distance passenger business, cargo, infrastructure etc.

The company generate half of its revenue through rail transport directly while remaining half is generated by logistics and other elaborate services. The company responsible for infrastructure construction, maintenance is further divided into three divisions i.e Infrastructure, Stations & Services and Energy divisions.

The professional management board runs the affairs of the company. There is a 20 members supervisory board comprising of shareholders representatives, employees representatives and state representatives.

SNCF ($40.12 billions)

A French state owned railways company, it employs 2,70,000 people in 120 countries. It operates a network of around 30,000 kms with 2600 km of high-speed network. SNCF has a fleet of 15000 trains. SNCF is among top 25 companies of France and listed in the Global Fortune 500 as well. It has subsidiaries companies to cater for infrastructure, manufacturing, rail transport, tramways, buses etc. It is a state owned company but strictly run on the basis of corporate principles.

JSC Russian Railways ($39.04 billions)

It is a very large company, which operates 85,000 kms of network. It has a workforce of 7,50,000 in 40 countries. It carries over a billion passengers and two billion tones of freight every year. It is a state owned company with fully vertically integrated operations. It maintains infrastructures and manages the operations as well. It was separated from the Ministry of Railways of Russia in 2003.  Later, Ministry of Railways was dissolved and merged into the Ministry of Transport.  Russian government controls the top appointments in the company; however, the business of the company is carried out strictly in accordance with the industrial structure.

Indian Railways ($ 28.8 billion USD)

India is a state owned and managed railways comprising of 18 zones and 68 divisions. A General Manager heads the zones while Divisional Railway Manager (DRM) heads a division. A seven member professional railway boards is responsible for the strategic management of railways in India. It is a network of around 95,000 kms, 7321 stations and employs around 1.2millions people.

India is a very large railway. It carries over a billion tones of freight and around 8 billions passenger per annum. Its passenger volume is more than the population of the world. Indian Railways have gradually moved towards corporatization and it is majority shareholder in 16 public listed companies, which carries out different activities relating to core/non core business of Indian railways.

East Japan Railway Company (JR East) ($ 27.7 billions)

Based in Tokyo, this is a company that deals in the areas of transportation, retails & services, real estate and hotels. This company has successfully diversified its business by applying Railway plus Property (R+P) model.

BNSF Railways ($ 21.38 billions)

Based in Fort Worth, Texas, BNSF is one of largest transportation company in North America. It operates a 52,303 km route covering 28 states in the US and three Canadian provinces and runs a total of 25 intermodal facilities. It has an employee base of 41,000 people.

Union Pacific Corporation  ($21.24 billions)

Union Pacific Railroad Company operates 8,573 locomotives on a 51,695km network covering 23 states. Headquartered in Omaha, Nebraska, US, the company serves 10,000 customers with a workforce of 41,992.

Central Japan Railway Company ($17.14 billions)

Based in Nagoya, Japan, JR Central is mainly involved in providing passengers with reliable rail transportation services. The company employed 28,867 people as of March 2018.

The company’s business segments include transport, merchandise, and real estate. It has also employed R+P model to its advantage.

West Japan Railway Company (JR-West) ($14.12bn)

Headquartered in Osaka, Japan, JR-West operates 5,008.7km of rail network covering 16 counties and two provinces. The company runs 6,562 vehicles covering 1,200 stations.

JR-West’s business segments include transportation operations, retail, and real estate. It has successfully adopted R+P model.

CSX Corporation  ($11.4bn)

CSD has 33,796km rail network. It operates in 23 states east of the Mississippi River and the District of Columbia, as well as Canada’s Ontario and Quebec provinces. Headquartered in Jacksonville, Florida, the company employs a workforce of approximately 24,000.

Common Features of High Performing Railways

The review of highest yielding railway enterprises would reveal beyond any shadow of doubt that the structure of management is based on established corporate principles. Even in government owned enterprises business decisions are made based on the principle of efficiency, business diversity and engagement of sector specialists.

It is also important to note that capacity of the system is utilized to the optimum level with high frequency of service and better load management. The corporate style railways are employing more people with better wage structure.  When we look in the context of PR, it has essentially ignored the developments taking place in the industry and refused to initiate or accept any process of reform/change.

Issues/Challenges of Pakistan Railways

The foremost problem of PR is the quality of human resource at its disposal. Since, PR has monopoly over rail sector, it was supposed to recruit, train and retain the best human resource. However, for the most part, the human resource of PR is less educated, skills deficient, low paid, demotivated, and poorly trained. The present organizational structure, training modules, work specializations, business processes were designed to meet the needs of 19^th century or early 20^th century railways. The industry has gone through significant transformation, yet, PR mindset is still stuck in the past. There has been no insightful attempt to reform and upgrade the knowledge base of the work force.

Another major bottleneck is the poorly maintained infrastructure, rolling stock and locomotives. This leads to frequent failures and occasional fatal accidents. The poor reliability coupled with poor safety record has tarnished the image of the organization. This can be easily gauged from the fact that in 1980, the annual passenger volume in PR was around 140 million when population was around 80 million. In 2020, when population is around 220 millions, PR is carrying less than 50% of the passenger volume of 1980. We have already lost our business case.

Railway networks all over the world connect the important towns. In India, China, Europe, railways networks are in all places including small towns. However, in Pakistan, the lazy thinking of PR managers has reduced it virtually to a one-corridor railway (Rawalpindi-Karachi). The railway network in all other provinces KP, Sindh and Baluchistan has been reduced considerably. Even in Punjab many branch lines/tertiary lines has been closed. This reflects very poorly on the organization that flourished on public money for ages, yet, it never bothered to maintain the level of services provided by the colonial government. This reduced network makes the railway market far less relevant for the government as well as private sector. The shrinking level of service for people undermines the case of railways to claim subsidy from the government.

PR management has never made a deliberate effort to expand the scope of railways to involve the provincial governments, district governments to elicit necessary political and financial support. This is rooted in the mindset that feels inherently insecure in broadening the base. As a result, PR, for all practical purposes is at the verge of closure. PR never made an attempt to bring professional members in the Board for a very simple reasons that if AGMs were posted back to the Board, they would have to relocate themselves outside of Lahore. This regressive mindset would blame everyone except them for failure of railways.

Pakistan Railways Academy, Walton is a nerve center of PR. PR administration has never made any attempt whatsoever to upgrade PRA’s infrastructure, quality of faculty, develop new training regimes, introduce a research and development wing, bring in new knowledge and inculcate specialized skill set needed for a modern railways. The organization was headed by a grade 18 Principal, which was later upgraded to grade 19 director and then upgraded to a grade 20 Director General and finally again upgraded to a grade 21 for parking the undesirable senior officers. This up gradation has nothing to do with actual up gradation of the institution.

Similarly, another vital institution of PR, the Federal Government Inspector of Railways has never been reformed. The mandate of the office require that there should have been more than one FGIRs long ago for infrastructure inspections, for safety audit of rolling stock and for accidents and investigations. But since this functional specialization has been ignored, the safety of organization plunged to the lowest level. Any talk of reform is fiercely resisted, and if that is not possible, slowed down considerably to buy time.

Railway plus property model revolutionized the profitability of the railway industry in Hong Kong and Japan. It has been happening since decades, yet, in PR there has been hardly any initiative to turn our land as a major revenue-generating source. The civil engineering cadre, who has got nothing to do with land management, land development or conceiving business model, has been manning it. The ground reality is that they have made encroachment easy while profitable legal enterprise through JVs almost impossible.

It was imperative for railways to expand its service, to help establish provincial/ regional railways, to provide assistance in establishing rail based mass transit systems, to create an environment for expanding rail industry, getting hold of logistics business in road/maritime and aviation. But these conceptualization required high quality human resource in engineering, business development, financial analysis, law etc. A serious review of quality of human resource would reveal that PR does not have the internal capacity to conceive or carry out any reforms. This is a serious impediment. The WB sponsored reforms in 1990s failed precisely because those were implemented through the existing HR of Pakistan Railways, which was neither capable nor willing to implement the reforms.

The manufacturing units are another white elephant, which produce little value. PR faces serious constraints in terms of capital, human and technical resources. There is a dire need of making a realistic assessment of the existing situation and carry out interventions to provide breathing stability so that long terms process of reform can be initiated.

There is a tendency to say that PR infrastructure is 150 years old and unless ML1 is built, nothing will change. This argument is faulty and an attempt to conceal the facts. The major portion of ML1 is Karachi –Lahore Corridor. If we look at the investment/up gradation projects of last two decades, this corridor must have been fit for the speed for 120 km/h. It should have been considerably safe. The entire projects of Doubling of Track (DOT) and Track Rehabilitation (TR) along with many small projects have been implemented on this corridor. What are the tangible improvements in terms of speed, safety, and reliability? We need an honest appraisal, not to penalize anyone but to get the realistic picture of what need to be done. (PR advisors will never let anyone explore this)

Railways are the Future- How to build a viable rail sector?

In the initial phase of railway expansion, many private companies financed the construction of railways because rate of return on capital investment was high in those days. As a result, private companies also constructed many lines in subcontinent. The private companies principally financed the largest railway network of the world built in USA. However, with passage of time, transport market has become very competitive. Rail infrastructure is capital intensive with relatively low returns, hence private sector backed out and gap was filled by the public sector in most countries.

In recent times, the largest expansion of railways is taking place in China and India. Both these expansions are financed through public money. However, railways have many advantages in terms of environment, which makes the case of building railways quite convincing especially in countries putting premium on carbon credits. In a country like Pakistan, option of financing through private sector is far fetched, building railways through external financing will put extra restraint on balance of payment, and public funding is extremely difficult because of shrinking fiscal space.

In this context, the managers of rail sector must tailor the industrial structure in a manner that they get resources from all the sources according to their need and use those resources to create profitable or at least sustainable railways. PR has a very precious land resource at prime urban locations throughout the country, which can be developed to solve the crisis of equity in the sector. The structure of the PR must be redefined/changed to fit in the role of provincial governments/district governments where full or partial funding for some projects may be obtained from these governments as well. In post 18^th amendment scenario, the provincial government has funds for public sector development. These funds can be used for financing the development of railways in their regions. A structure of joint financing can be arranged with each provincial government.

Ralways Plus Property (R+P) Model

Hong Kong Railways is one of the best performing railways of the world. It serves the need of this gigantic metropolitan. The number of commuters using the transit system runs into millions and it generate a profit of around 1.5 billion USD per annum (2015 estimates). This is despite the fact that rail fares are comparatively low compared to other system. It charges an average of 1USD per passenger per trip compared to 1.5 USD by Tokyo, 2.75 USD by New York and 4.0 USD by Stockholm rail transit.

The rail company, which is listed in the stock market, is owned by the government (76%) but is run by the corporate sector expert purely on commercial lines. It extensively uses all the assets for revenue generation. The station designs, urban development, train branding are used to maximize revenue. The company paid around 600 million USD to the government in dividends in 2015-16. It uses the capital to finance construction of new lines and development of new urban settlements. The company is not only a transport service provider but it is also central to the urban planning, land use and housing development.

PR can use this model for financing rail transit in all provincial capitals. The cash flow based on R+P model will make it a successful venture. If little gap in financing are left that can be filled jointly by federal and provincial governments. This will essentially require a new HR with new skill set, entrepreneurship and leadership capacity. The big challenge in this regard is finding the right kind of human resource to conceptualize and implement the model.

Tokyo railway is also a leading example of business diversification and success of R+P model. Tokyo Corporation is a conglomerate of around 400 companies with 30 thousand work force. Surprisingly only 1/10^th of the employees work in railways. They have developed real estate, retail outlets, and bus companies and relied very little on the far box revenue. Such diversification is badly needed in PR.

Reforms in China’s Rail Industry

China is a global leader in innovation and reform in rail sectors. Chinese started embracing market based economic model since 1980s and gradually got away with the planned model of economy. Rail sector was the last remnants of planned economy model that was disbanded in 2013 and Ministry of railways was abolished to create an entirely new industrial structure. It was felt that that expanding rail sector in China and BRI imperatives are too big for the Ministry of Railways to handle hence a new institutional structure was needed. However, before actually disbanding the Ministry, there was considerable capacity building of the sector to facilitate a smooth transition.

Consequently, in 2013 MOR was split into the National Railway Administration (NRA) and the China Railway Corporation (CRC).

The NRA is the bureau within the Ministry of Transport (MOT) responsible for the management and administration of the rail sector as a whole, including

• Laws and regulations governing the sector;
• Formulation and implementation of railway technical standards;
• Management of railway safety, including the licensing of participants and 
investigation of railway accidents;
• Regulation of rail transport and construction;
• Supervision of service quality and public service obligations undertaken by 
railway enterprises; and
• Monitoring and analysis of railway operations and the rail industry.

CRC is a 100 percent state-owned enterprise with its shares held by the Ministry of Finance. It is responsible for the management and safety of almost all the 127,000-kilometer (km) public network, including

• The unified dispatching and control of railway transport;
• Operation and management of passenger and freight transport services;
• Public-benefit transport;
• The railway construction investment plan and national railway construction 
and financing arrangements in conjunction with the National Development 
and Reform Commission (NDRC); and
• Preparatory work for and subsequent management of construction projects.
• There are 18 Regional Authorities (RAs), which maintain the rail network and provide train services. Nevertheless, operational and overall construction management of the rail network remains highly centralized, which has been a key factor in achieving such a rapid development of high speed rail (HSR). The railway sector also includes a complete industrial chain of engineering construction and equipment manufacturing entities, many of which are state- owned enterprises, under the supervision of the State-Owned Assets Supervision and Administration Commission (SASAC). Design institutes and university rail programs are important players in sector development.

Action Plan (Immediate Interventions for Efficiency & Profitability)

PR as an organization has lost its credibility for public because of abysmally poor safety, huge deficit and low reliability. The organization is too weak, too frail to reform even. It will be gigantic task to bring in some kind of stability/strength in it for paving the way for long-term reforms. In the prevailing circumstances, it is unlikely for the government to fund PR. Therefore, PR need to do some critical management interventions to slow down the pace of rapid decline and create some space for corrective actions. Some important steps that can bring some sanity into the organization are listed below:

1. Restoring the professional railway board with original members like Member Traffic, Member Civil and Member Mechanical. This will require AGMs to be sent back to the board. PR will oppose it tooth and nail for no professional reason but this has to be done. In order to further strengthen the governance regime, the private members of the Board must be taken from leading chartered accountants, lawyers and real estate development specialists.
2. The CEO of PR must be a dynamic sector specialist with advanced knowledge of railways management and contemporary practices. With typical PR mindset, nothing will change as most people have neither capacity nor willingness to bring about much needed reforms.

• The office of FGIR to be reformed immediately. A civil engineer FGIR has proved highly inadequate in conducting safety audit of the rolling stock, and has consistently failed to carry out investigations on merit, hence there is a dire need of appointing at least three FGIRs with full budget and staff support. It must be laid down in rules that officers once posted in FGIR will never get back to PR. This bad practice has been responsible for horrific accidents in PR, as successive FGIRs have failed to discharge their duty honestly and competently.

1. PRA, Walton is the brain center of rail sector. The best officer from BS 19/20 may be posted there as DG with a team of highly qualified grade 18/19 officers. It must report directly to Ministry. It’s budget, staff should be made independent of CEO. The pay structure of Academy to be made at par with NSPP. It must develop technical, managerial and leadership capability of existing as well as future leadership of railways. The entire syllabus, examinations structures, instructors need immediate overhaul. In three years, entire training regime can be changed in collaboration with FPSC and Establishment Division.
2. In land directorate, existing HR is very poor with ne sense of direction. It is important to induct people from MLC, PAS, PMS and PSP to give it a new outlook so that space for further reforms may be created. Finally, PR will have to create a new industrial structure of land management, but before that a professional management structure is required to be put in place as an interim arrangement because existing management will never let the reform process become a success.
3. The track infrastructure is in bad shape. After relocating the AGM/I as member, CEN (Open Line) must be given the task to personally supervise the track maintenance/improvement work on ML1 along with territorial deputies chiefs and field divisional engineers. Based on safety profile of last few years, improvement works carried out in different projects, weak/strong areas can be easily identified for targeted interventions. This must continue for at least one financial year. PR must remove the blind spots, which drain resources but contribute very little towards safety.

• The manufacturing facilities are supposed to supplement the safety of rolling stock. Their daily productivity reports may be generated for discussion in punctuality meeting in the office of COPS. A weekly meeting of punctuality must at all costs be held by CEO to monitor the input of these units in improving punctuality/safety. The blind spots in terms of resource drains and inefficiency must be identified and addressed.
• PR has schools/hospitals in name only. We must either disband them or turn them into state of the art facilities by conceptualizing workable Joint Ventures with private sectors. These resources must generate financial and social utility for the citizens. A resource that  does not create value for the citizen is a liability. A considerable improvement is possible in short span of time (2 to 3 years) if competent teams of professionals are appointed to manage health & education sectors.

1. The selection of Divisional Superintendents and key Principal officers must be carried out by detailed scrutiny of their resumes and career profile. Only people with leadership, integrity and professional competence to be posted on these assignments.
2. Financial System of PR is archaic. It is important that every cost center must have one or two accountants for bookkeeping and at higher levels there should be a team of qualified financial advisors. A half billion USD organization does not require such a large force of accountants. It must change sooner than later.
3. PR does not need detailed audit formations. Its funds can be audited by AGP or any other firm approved by the government but keeping such a huge formation of audit is counterproductive.

• PR must consider rationalizing its force from non-skilled/clerical to skill-oriented people. The relocation of work force is badly needed in core operational/technical formations where there is always a shortage. This practice of burdening PR with human resource that cannot perform the core functions must be discontinued/banned.

Long Term Strategic Action Plan

Short-term interventions are just for attaining temporary stability. The rail sector has to be revamped and built a new. A completely new governance model and structure of industry is required in line with international best practices. Pakistan needs to create a new Ministry of Transport just like China and USA. This Ministry shall be responsible for the entire transportation of the country. The regulation, policy making and safety aspects of railways must be assigned to the Ministry of Transport. The corporate entities of railways can be placed either under the Ministry of Transport or under the Ministry of Finance. The conceptual basis of building new industrial structure can be borrowed from either Europe or China or a mix of both.

Building New Industry Structure:

Experience shows an alternative to the archetypal railway can be formed from three main policy building blocks:

Business organization

 The degree to which its delivery institutions are to be structured in a business-like or commercial manner including the option of private sector ownership or operation of core railway functions;

Market competition

The degree to which the railway transport services it produces is to be competitive, as between different rail service providers

Separability

The degree to which its monolithic nature should be broken down and some of its sub-businesses be separated and decentralized.

Type of Business Organization

There are three main corporate forms that can help improve the performance of the archetypal railway organization by reducing bureaucratic demands and political pressures: a state-owned enterprise operating under a specific railways law or state-owned enterprise law; a state-owned company under companies law; or a privately-owned company under companies law. There can of course be more than one entity in any industry structure. In any particular country different legal challenges might be faced with the different structures regarding asset holding, accounting methods, taxation and transfer of staff to new entities. The choice of corporate form is therefore complex and mainly dependent upon environment of a particular country.

Market Competition

Railways are generally state owned monopolies. However, many countries structure their monopoly in a manner that still there is considerable competition within the industry. Competition creates incentives for managers to meet market needs at the lowest cost and encourages service innovations to gain market advantage. The strongest case for competition in the market is for rail freight services. Even in some small railway markets in individual European countries and Australian states, competition in rail freight transport is significant and effective.

By contrast, competition among rail passenger service providers is rare and occurs mainly in EU member countries under three scenarios: (i) between a long-distance national operator and a regional service provider on selected routes (e.g., German Railways Inter-City Express (ICE) Service or regional route concessionaires); (ii) between two operators on parallel or overlapping routes (e.g. 10-20 percent of the UK market); and (iii) using third-party track access rights (a few UK services planned between Cologne and Hamburg in competition with German National Railways).

The competition with other modes like Shipping, Aviation and Road is also very healthy. Optimal mixes of intermodal transport serve the national economies of scale very well. So far, china has been very successful in structuring their transport industry on this model.

Seperability

How the railway industry structure is divided, referred to as ‘separability’, comprises of two primary dimensions, horizontal and vertical. Horizontal separations are sometimes justified by creating better managed, decentralized, and market focused units from a monolithic national company. China has structured its rail industry on horizontal separation.  Vertical separation into companies for operations and for infrastructure can help expand private sector participation and competition in train services (EU model of segregation of Infrastructure/Operations).

Restructuring of Manufacturing and Material Supply Sector of Railway

Many early railway manufacturing and materials companies were privately owned and independent from the core railway. But the mutual dependence of ‘large buyer/large seller’ led some railways to develop their own manufacturing capability. Moreover, in China, Great Britain, India, and the Russian Federation, railway nationalization and integration led to ministerial or departmental structures with responsibility for both railway system and manufacture of capital assets.

Now most countries have dismantled these structures in all industries, not just railways, because experience has proven that the exclusive relationships of co- owned public industries reduced incentives for efficiency and innovation for both. In the railway transport industry it produced technologically outmoded locomotives, rolling stock, and other equipment. In railway manufacturing industries, it undermined their potential to be internationally competitive.

Today, the railway supply industry is diverse, global, and competitive. Nearly all capital equipment and materials for railway infrastructure or operations can be procured competitively using domestic or international tendering. Technical ability to specify and monitor railway equipment performance is a core railway competence, particularly for assets that provide competitive advantage in the transport market. However, preserving significant manufacturing capability within a railway transport organization is difficult to justify because the required competencies do not serve the core business of passenger and freight transport.

Role of The Government

In building the new industrial structure, government must retain the core competencies within its own structures to play the following role:

• Setting the transport policy/Aims & framework
• Creating railway sector structures/Regulation
• Facilitating International Railway Integration
• Purchasing Transport services under public service obligations (Federal/Provincial/Local)
• Establishing Administrative apparatus
• Governance structures for entities owned by the government

In the final analysis, there is always a scope for creating a different reality out of ashes. It requires leadership, vision and strong political commitment. The existing capability of PR is not likely to survive for long. If rail sector is to be retained in the national economy some drastic measures has to be taken to build a new industrial structure independent of ML1. It is important because if China backs out from ML 1 then what is our option? There is a dire need to create teams of dedicated/competent officers in different components of railways with a defined mandate of two to three years. The impetus for national development must come from within.

(Muhammad Hanif Gul)

The writer is a senior Civil Servant working in Pakistan Railways. He is a graduate of Railway System Engineering from University of Birmingham, UK and SPURS/Humphrey Fellow at MIT, USA.(+92 301 4188853)