Public-private partnership-based freight transportation: Railways seeks EoI

In an effort to lessen the on-going financial crisis, Pakistan Railways (PR) has sought expression of interest (EoI) from the private sector for freight transportation, on the basis of public-private partnership. According to sources, the PR is facing severe shortage of locomotives for freight operations and only six engines are in working order for goods trains and 100 engines for passenger trains.
On the other hand, 400 engines are required to run the system properly. Due to financial crisis, loan of Rs 40 billion, taken from the State Bank, has become a liability for the railways. The Railways has invited private sector to participate in the revival of the locomotives and wagons fleet for freight operation. The proposed arrangement envisages short-term financing from the private parties in the shape of advance tariff, which will be paid back to the parties evenly over the contract period through appropriate tariff adjustment, sources added.
"Financing will be used for repair of currently offline locomotives/rolling stock under transparent joint control mechanism", said sources, adding that it also includes reciprocal commitments whereby PR will dedicate the assigned locomotives for exclusive use of the private parties that would in turn commit a guaranteed business to Railway during the contract period.
Parties have been requested to express their interest on a prescribed format along with supporting documents. Suitable parties will be pre-qualified on the basis of the criteria provided in the Guidelines. Only pre-qualified parties shall be subsequently invited to submit their Business & Freight Movement proposals.
A pre-proposal conference will be held on November 1, 2011 in PR Headquarters Lahore to clarify the observation and queries of interested parties on the proposed partnership arrangement. Reasonable suggestion from the parties may be incorporated in the contract structure at the discretion of PR, sources said. They said that a full-scale rehabilitation of about 150 locomotives would also be started as soon as the government releases the committed amount of Rs 6 billion. It is projected that 96 locomotives would be back on track by the end of the current fiscal year to earn revenue of Rs 12 billion.