Karachi (Cliff News)The Sindh High Court (SHC) has granted stay against Pakistan Railways for scrapping a multi-billion rupees project with a private firm under (Public Private Partnership) programme for which the Ministry of Finance had estimated an income of Rs196 generated through the agreement. The sources said that the red-tapism prevails in the Pakistan Railways has resulted in unfortunate climax. This could be the first ever jolt to the most ambitious project of CPEC as the track access agreement could have been benefited to Chinese oriented projects and logistics support and cargo movements.The company M/s Fast Track Silverlink Ltd was granted a Track Access Project agreement in May 2013. The project was launched on the basis of Finance, Own, Operate and Maintain (FOOM) basis. Which clearly points that it does NOT require any investment by the railways. As per that Agreement the company was awarded the right to invest on its fleet of locomotives, freight wagons and run its own freight trains on the tracks of Pakistan Railways through PPP-Public Private Partnership basis.Through this and other contracts of Track Access Pakistan Railways can earn billions of Rs in yearly revenues. According to estimate developed by Ministry of Finance the project will generate Rs 196 billion for PR and this project is set to transform the railways industry in the country with best international practices.The project revolves around opening the railway access for private parties in freight sector which is extremely high demand sector due to increase in freight volume of the country. Currently PR is not equipped and unable to meet the growing demand of for freight due to obsolete rolling stock, mismanagement and lack in commercial and operational management, as a result of this PR share country freight market is less that 2% which means that more than 98% of freight is being transported by trucks in the country, through this project of great national importance, PR with the help of Ministry of Finance were to encourage the private sector to come forward and invest in Locomotives, Rolling Stock. The involvement of private sector basically will result in increasing railways share in freight business and will help railways to generate billions of Rs without investing millions of Dollars into locomotives and freight wagons procurement.The model revolves around the concept of paying TRACK ACCESS Charges to railways on gross per ton basis.
The private party will also bear all operational costs including Oil, maintenance and human resources.
The private party will also invest in developing loading and unloading terminals at the designated places and railways can earn good amount by providing land at suitable places to private parties for this purpose.The increase in freight trains by the private parties will result in providing the following benefits for the country:Estimated Revenue of around Rs 198 billion for Pakistan Railways Complete investment from the private sector and commercial expertise to generate extra revenues for PR
NO fuel cost for PR (Biggest cost element of PR will be taken care of by the private sector)NO Maintenance Cost for PR (Maintenance cost will be private sector responsibility)NO Human Resource Cost of PR (As private sector will invest into it)
Use of Idle Capacity of Railways tracks
Employment opportunities for PR ex staff as well as private sector to accommodate experts from different fields
Reduction in road congestion which will reduce wear and tear of road segment
Reduction in transport cost for trade and industry The project comprises greater benefits for PR in specific and to the trade and industry and the country in general eanring billions of Rs for PR and saving billions for the country
For the above the parties (Private Sector and Pakistan Railways) signed an Agreement in May 2013 as per which Railways had to form a Project Management Office (PMO) as a first step to start executing and govern the project
The private party made substantial investment towards the execution of the project which includes selection of locomotives and other Rolling stocks, feasibility studies, financial institutions involvement for the financing of the project and many others.
PR completely failed to form a PMO to start the project while on the other hand the private party kept on following up with PR to fulfill its obligations and execute the project.Not only PR failed to notify PMO office, it also did not provide any specification of locomotives to the private party and did not cooperate with the private parties at all. Result of all of these delays is substantial losses to PR on YOY basis as well as to the national exchequer. ⦁ After not receiving any response from PR for the execution of the Track Access Project, the private party (Fast Track Silverlink) filed a petition in Sindh High Court in Feb 2017 asking for its interference to ask PR to implement the project and save the valid Track Access Contract from any possible cancellation from PR.The quantum of communication, written letters and reminders, from the private party, clearly mentions the seriousness and willingness of the private sector to invest into Railways through Track Access Project .Despite substantial investment of time and money on part of the private party, PR is yet to act positively. The petition will come up for hearing on a date in office as SHC has instructed the Pak Railways to submit its reply.