|
Project Rationale and Linkage to Country/Regional Strategy |
For the past 150 years, railways have played an important role in the social, political, and economic life in Pakistan. For most of that time, railways were the leading mode of transport, in many places the only available mode. In a relatively large country, railways have offered unique advantages for transporting freight and passengers over long distances. In the past 20-30 years, however, increasing competition from road transport has reduced railway's market share. As of 2016, railway accounts for 4% of freight traffic and 6% of passenger traffic with major shares taken by road. As a result, the financial performance of PR, has deteriorated and has not generated enough resources to finance necessary investments in asset replacement and capacity expansion.
In Pakistan, government's public investments have been heavily skewed favorably to the road sector. Neglected from public investments and overburdened with social responsibilities, the performance of the railway sector had continuously deteriorated until 2011 and the sector was on the verge of a collapse, faced with poor rail infrastructure with huge backlog of maintenance, outdated and non-functioning locomotives and rolling stocks. Since 2011, however, PR's operational performance has markedly improved and helped avoid a total failure of the sector mainly owing to improved availability of functioning locomotives and PR's well-thought-out marketing strategies like strategic tariff setting, adroit market segmentation and focusing on profitable target markets, and long-term engagement with clients.
Despite recent improvement, the railway sector need upgrade its infrastructure on a large scale to provide more competitive transport services, regain the market share lost to roads, and ultimately rebalance the unbearably unbalanced modal share between rail and road in the country. Rebalancing the modal shares will accrue huge economic benefits to the country by relieving the overloaded road sector of overstress to road infrastructure and excessive maintenance burden and better utilizing huge sunk investments of rail infrastructure which, otherwise, will be left idle and further deteriorated. The Vision 2025 emphasizes the importance of railway transport and arranges public supports to revitalize the railway sector.
|
