SWOT Analysis of Pakistan Railway

Strength
Despite dissatisfaction passenger traffic is constant. Experienced well trained staff that are still
motivated and serious about improving its performance. Profitable long haul passengers are
also freight corridor with good permanent way despite maintenance backlog. Well equipped
and well staffed loco and rolling stock maintenance facilities. Then availability of a modern
container terminal

Weakness

Rapidly depleting assets; rolling stock, telecommunications and signaling networks. Despite
being a commercial organization, it is being run as a government department, having public
sector procedures and culture. Limited number of individual is freight customers and
commodities. Political is necessity to operate even those services which can never cover their
costs. Extensive network is to maintain which cannot be commercially viable in the face of
tough competition from road. Overstaffing is in the certain categories, while understaffing in
critical areas. Poor MIS and financial reporting system needed for a modern, commercial
organization. Poor connectivity is a problem with other modes of transport to make it a part of
multi-modal transport system.

Opportunity

Increasing passenger and freight traffic due to increasing population and prosperity  Increased
demand for cross border regional linkages. Global preference is for multi-modal transport in
which rail is becoming dominant. Growing concerns/awareness about environmental issues can
force policy makers to give more importance to railways. Greater costs are effectiveness of
railways as compared to other modes of transport. Improved road network is in remote areas-a
blessing in disguise for stopping uneconomical train operations without much inconvenience
for the public. Development and commercialization of railway property not needed for
operations. Growing importance and acceptance of Public Private Partnership (PPP) along with
emergence of strong private sector can bring the needed financing and skills and management
throughout sourcing.
 Thread

Continued efficiency improvements in road sector along with improved road network can give
tough competition to railways. Improved service by road transport firms can be a challenge.
Premature and ill planned privatization can bring ruins. Claims of the provincial governments on
its land can stall any efforts to modernize it by commercialization of its lands not needed.

Causes
1. Underinvestment

2. Institutional dichotomy

3. Governance issues

Underinvestment

After 1973 Pakistan Railways' budget was amalgamated with the national budget with the
result that the profit they earned was diverted to other heads, leaving less and less for its
maintenance, expansion and improvement. On the other hand, the Government spent three
times more on road sector. It was this combination of neglect to railways and preference to
roads, which is the root cause of the present malady of Pakistan Railways. Ministry of Railways,
which is responsible for providing funds for the maintenance and development of the provision
of the railway network has no long-term framework for capital support to perform these roles.
On the contrary India invested heavily in railways and less on roads with the result that our road sector
is better than Indian one. Indian railways are far better than their Pakistani counterparts in terms of
profitability and customer satisfaction because India invested in rail network. We have not been able to
formulate any National Transport Policy which could at least show where railways stand vis a vis other
modes of transportation. Overall financial crises of the country have reduced the availability of the
resources for routine operations not to speak of replacement and up gradation. Not up to date, even
then present rolling stock can earn profit if cash is injected. Wrong priority of investment in the railway
is another big anomaly. There was no justification for the dualization of railway tack from Karachi to
Lahore in the initial stages of its development as we could have easily handled the traffic load by
lengthening the railways stations loop lines. Similarly up gradation of Monabao track from narrow gauge
to broad gauge was just a political expediency without financial or economic cost effectiveness.
 Institutional dichotomy

Besides amalgamating the two budgets, the government also made Pakistan Railways a
government department under the newly created Ministry of Railways. Consequently, instead
of a commercial organization, it became a bureaucratic organization where rules and
procedures count more than end results. Direct interference of bureaucrats in the purely
technical issues always leads to ineffective service delivery. Now the anomaly is that we are
expecting commercial results from an entity being run as governmental department. Railways
cannot increase fares even if the price of oil triples. Similarly, it cannot terminate those
services, which are no more needed as better road network, and good bus/truck services are
available in the private sector because of political imperatives. In India, if the government
needs to continue a loss making train service due to strategic reasons, it has to pay to the
railways for the loss but you cannot do it in Pakistan. Even train stops are now decided on
political basis. Ministry is effectively rule-maker, manager, player and umpire of Pakistan’s
‘railway’ team. Such a combination of conflict in roles with concentration of powers is inimical
both to good public policy-making and to effective commercial management of state-owned
enterprises.

Governance issues

Running a commercial organization with political considerations cannot yield profits, just losses. Tariff
rationalization, operational decisions and developmental budget allocation need commercial
considerations not political interference. Posting/ transfers made on political expediency adversely
affects the operational efficiency and employee’s morale. Corruption is widespread because those
caught have long hands reaching the corridors of power