Siemens Bullet Train Feasibility Report for Pakistan

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SIEMENS 1

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This is a feasibility report we did in Nust Business School BBA2K5-B as part of our term project for International Business management.

Transcript of Siemens Bullet Train Feasibility Report for Pakistan

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INTRODUCTION:Siemens AG (Berlin and Munich) is a global powerhouse in electronics and

electrical engineering, operating in the industry, energy and healthcare

sectors.

 The company has around 400,000 employees (in

continuing operations) working to develop and

manufacture products, design and install

complex systems and projects, and tailor a wide range of solutions for

individual requirements.

Our Values and Vision: a guide to our business conduct

Our stakeholders – customers, shareholders, employees, suppliers and the

societies in which we operate – expect the highest performance and the

highest ethical standards. Meeting these requirements is the ultimate

determinant of our success.

Reaching this goal requires a new balance in which values, business

operations and the pursuit of our vision co-exist harmoniously. After closely

examining our history and culture, we distilled our essence into three core

values: Responsible, Excellent, and Innovative.

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These values supersede our former ‘principles’ and must be lived

interdependently. For each value, we have derived clear principles that

guide our decision-making and behavior. They must be embedded in

everything we do at Siemens.

Our values drive our vision which shows how the highest performance and

ethical standards can deliver profitable growth. With the support of everyone

at Siemens, it will enable us to become a role model for outstanding business

conduct.

Responsible: Committed to ethical and responsible actions

At Siemens, we are determined to meet - and wherever possible, exceed - all

legal and ethical requirements. Our responsibility is to conduct all business

according to the highest professional and ethical standards and practices:

there must be no tolerance for non-compliant behavior.

The principles related to ‘Responsible’ serve as the compass by which we

navigate our way through our business decisions. We must also encourage

business partners, suppliers and other stakeholders to adopt a similar

standard of ethical behavior.

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Our principles:

We obey the law

We respect the dignity of all people

We foster health and safety

We conduct business in a truthful and transparent

manner

We are fair in our relationships with competitors

and stakeholders

We honor commitments

We respect property

We strive for the protection of the environment

We are committed to good corporate citizenship

We are fully engaged and empowered to achieve

the best results

Excellent: Achieving high performance and excellent results

We at Siemens set ourselves ambitious targets - derived from our vision and

verified by benchmarks - and give our all to achieve them. We stand beside

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our customers in the search for perfect quality, coming up with

solutions that exceed expectations.

Excellence demands we define a path of continuous improvement,

constantly challenging existing processes. It also requires us to embrace

change so we are in the right place when new opportunities open up.

Excellence also means attracting the best talent in the marketplace and

giving them the skills and opportunities they need to become high-achievers.

We are committed to living a high-performance culture.

Our principles:

We set ourselves best-in-class goals and achieve them

We are passionate

We are willing to go the extra mile

We are disciplined and act fast and decisively

We always strive for improvements and perfect quality

We deeply understand our customers‘ needs and

challenges

We systematically develop our personal skills and

leverage our full potential

We interact in an efficient and pragmatic way

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We embrace change to ensure we are competitive in the

future

Innovative: Being innovative to create sustainable value

Innovation is a cornerstone of Siemens’ success. We closely align R&D

activities with business strategy, hold key patents and have a strong position

in both established and emerging technologies. Our goal is to be a

trendsetter in all of our businesses.

We unlock the energy and creativity of our employees, embracing the new

and different. We are also ingenious and we embrace this quality in all its

varied meanings - original, inventive and resourceful.

We are entrepreneurs whose innovations are successful on a global scale.

We measure the success of our innovations by our customer’s success. We

constantly renew our portfolio to provide answers to societies’ most vital

challenges, enabling us to create sustainable value.

Our principles:

We create innovations that give our customers a

unique competitive edge

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We act as entrepreneurs

We are creative and open to new ideas

We are ingenious and visionary

We are trendsetters

We constantly challenge the status quo

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CORPORATE STRATEGYSiemens has shown that it is committed to the principles of good corporate

governance and that it is aware of its responsibilities as a global company –

for supporting the communities in which it does business, and for leaving

behind an intact environment for future generations.

The corporate strategy of Siemens has three main elements which are

Global competitiveness

Customer focus

Innovation

The perspective of the corporate strategy is technological leadership and

worldwide presence by focusing on global competitiveness, customer focus

and innovation. The company emphasizes a lot on innovation which for them

means the ability to transform knowledge, creativity and experience into

new products.

"Inventing the future" is Siemens’ motto. Simply chasing after trends isn't

enough for a global corporation such as Siemens. Instead, it must identify

promising ideas and new approaches at an early stage, lay down a course of

action and emerge as an innovation trendsetter. To achieve this, Siemens is

focusing on the future in numerous ways

A major challenge for Siemens is corporate responsibility. In terms of

corporate responsibility, the aim is to be an industry leader in the areas of

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corporate governance, compliance, climate protection and corporate

citizenship. This defines important management emphases for

Siemens corporate. Corporate responsibility is the integral part of the

company’s corporate program for 2010. Siemens view risk taking as the

philosophy of pursuing sustainable growth and creating economic value.

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SIEMENS RAIL INDUSTRY:

The core products for railway logistics by SIEMENS include the following:

Rail automation, which includes spare parts and up to date railway related

accessories.

Locomotives, which are used for trams and intra city tracks.

Electrification, which include state of the art electric supply system for

maglev and electric trains.

Light rails, which are also used for trams and intra city commutation.

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Turnkey systems, which are specific trains designed for underground

subway systems.

Trains, which include high speed valario and other bullet trains

Integrated services, which include software and hardware solutions for

railway logistics and supports.

Heavy rail, which are used for freight and cargo delivery.

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GLOBAL PRESENCE:Major facilities of SIEMENS are located worldwide, providing it a competitive edge

over its competitors and enabling a R&D that is localized to every part of the world.

This network of facilities across the world enables SIEMENS to produce high quality

products at cheaper prices, because it is able to reduce its manufacturing costs as

well as its distribution and transportation costs.

Currently SIEMENS is present in more than 40 countries of the world and its major

facilities are located across all the continents such as AMERICAS, EUROPE, ASIA-

PACIFIC and AFRICA.

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GLOBAL R&DSiemens invest a lot in R&D and considers research to be the basic tool for

their growth in different countries of the world. Siemens innovation answers

world’s toughest questions. Its innovation in the night vision systems for

cars, in 2005 sep 16,at the International Motor Show (IAA) in Frankfurt,

Siemens introduced a night vision system that works with infrared

technology. With this innovation, Siemens has also become the first

automotive industry supplier to create a prototype of an electronic

pedestrian recognition system. One quarter of all serious traffic accidents

take place in the evening or at night. And about one third of all traffic

fatalities are the result of accidents during these hours.

In 2006, Siemens introduced a thinking car. The car possesses sophisticated

sensors, which help to monitor traffic and warn drivers of dangers in

advance. The car provides a more safe, comfortable, reliable and

environment friendly drive. Sensors warn the driver of obstacles on the road

even under poor visibility conditions, help park the car and also recognize

traffic signs. In a traffic jam, the thinking car tracks the vehicle ahead per

video system and adapts itself automatically to the traffic flow through

independent braking and acceleration.

Siemens’ innovation activities are based on the company’s Innovation

Framework, a matrix that defines what makes innovation successful. Along

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with technological know-how and knowledge of customers needs and

market trends, the factors affecting business success are specialized

sector know-how, excellent innovation processes and, above all, highly

motivated, highly skilled employees.

Siemens also employs innovation benchmarking. This helps them to pinpoint

areas where they are lagging behind and the position of the competitors,

through this methodology they try to catch up with the competitors. Mark

Engelfried, senior consultant in the Competence Center for Innovation at

Siemens CT (corporate technology).

"With our innovation radar we can detect all the success factors behind the

innovation—from strategy and culture to technology and processes. Of

course, in practice we don’t carry out a full assessment of every project.

Instead, we focus on areas of potential weakness, such as the innovation

portfolio or innovation processes."

To maintain competitiveness, businesses must be fast and flexible.

Digitalization and virtualization have important roles in achieving these

goals. Siemens uses the following five main criteria for success in the

Siemens Innovation Framework. These are closely linked as shown in the

picture.

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Thus the company emphasizes on innovation and the reason for this

innovation is their goal, which is to become the world leader.

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CORPORATE RESPONSIBILITY

At Siemens, corporate responsibility is a strategic managerial process aimed

at integrating business, environmental and social performance to create

greater value and enduring benefits within a framework of ethical practices.

The figure also explains further

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GLOBAL SALES OF SIEMENS

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INVESTMENTSSIEMENS' MAJOR R&D INVESTMENTS

€3.4 billion were invested in R&D in fiscal year 2007

32,500 R&D employees worldwide

17,500 software engineers

150 R&D locations in over

30 countries around the world

8,267 inventions in 2007

50,750 active patents

R&D CENTRES PRESENT GLOBALLY

USA9

BRAZIL9

19.3; 27%

22.8; 31%12.6; 17%

10.9; 15%

6.8; 9%

Sales (millions of Euro, percentage of total)

AMERICA EUROPE(exc Germany)GERMANY ASIA-PACIFICAFRICA,MIDDLE-EAST,CIS

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PRODUCTION FACILITIES PRESENT GLOBALLY

*The top manufacturing facilities are present in USA with about 21 facilities

GERMANY74

ASIA-PACIFIC51

AFRICA,MIDDLE-EAST,CIS

3

AMERICA 77*

EUROPE excludingGermany

59

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The global activities that are carried out by Siemens are divided in

different groups with each group

specializing In their own domains and later

the integration of all the products and

solutions that are provided by the Groups is

done to offer a world class service to its

customers. The T&S Group specifically deals with rail automation and

providing turn-key solutions. The group has been engaged in producing a

powerful freight locomotive that has the capacity of carrying upto 6ooo tons

of weight! In 2007 the profit margin of the group had increased from 1.6% to

4.3% with a net profit of about 190 million euros. The group as of 2007

employed 389,000 people worldwide

FOREIGN MARKETS ATTRACTIVE FOR SIEMENS

The two foreign markets that is feasible for

Siemens Germany is China and India. This is

because Siemens already has increasing

presence in the Chinese and Indian Markets. It

has been engaged in providing several high

speed trains to China and had also worked in collaboration with Shanghai

Metro Group since 1989. It has also engaged in the expansion of the metro

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in Guangzhou since 1994. According to Siemens China is providing

Siemens with a "strong base in a dynamic environment"

India has been one of the major countries

where Siemens is catering to the electrical

engineering and electronic market. The

country is offering tremendous growth

potential for infrastructure development for

Siemens. India is a "key market for growth" for Siemens

Furthermore, according to the IMD World Competitiveness Scoreboard of

2007, China is rated as 15 and India as 27 showing that the two countries

provide a competitive environment.1

CURRENT RAILWAY CONTRACTS:Some of the current railway contracts undertaken by Siemens are the

following

In India, Siemens has established about 18 factories. Siemens is

providing world-class trains in India

1 http://www.imd.ch/research/publications/wcy/upload/scoreboard.pdf

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In Russia, Siemens has signed a 30 year contract to provide its

high speed Velaro trains to the country

Siemens has shipped an eight carriage Velaro high-speed train to

China in December. The train can accommodate about 6oo

passengers.2

Siemens has received a EUR 140 million contract from America which

is one of the biggest contracts to modernize its railway system and

make it more efficient. The project will be initiated this year.3

A consortium made up of Siemens and its Chinese partner, CSR

Zhuzhou Electric Locomotive (ZELC), has been awarded the contract

for metro projects in China. The orders are worth a total of

EUR 431 million. Siemens is responsible for the traction technology and

automatic train control systems.4

Siemens signed a contract with Porter book of UK which is a rail leasing

company to supply 37 units of Desiro electric multiple units in

2007.This contract is worth EUR 340million. Porter book would further

lease these trains to the rail operator Govia5.

2http://w1.siemens.com/press/en/pr_cc/2007/12_dec/tstr20071206.htm3 http://w1.siemens.com/press/en/pr_cc/2007/12_dec/tsra200712008.htm4 http://w1.siemens.com/press/en/pr_cc/2007/12_dec/tsmt200711010.htm5 http://www.transportation.siemens.com/ts/en/pub/newsline/newsline/press_2007/2007/17_08_2007.htm

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COMPETITORS The SIEMENS consider the following as their major competitors in the market

Alstom of France

Bombardier of Spain

Finmeccanica of Italy

Invensys of United Kingdom

SPAIN

Mini bar in AVG train

The Bullet train network was built first time in 1992 in Spain. The country is

known for building the world’s fastest trains. The country uses modern

technology in locomotives, signal system, passenger and freight coaches and

the laying of rail tracks in order to bring an overall improvement in the

railway network and operations through which Pakistan can benefit also.

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Spain has been one of the countries where rail network plays an

important role and there is a demand for high speed trains. Currently

the most popular high speed bullet train is the AVE train (Alta Velocidad

Español) that is run on the Madrid-Cordova and Seville route. It can allow

seating of above 300 passengers and apart from having seats comparable to

first class seats in an aeroplane, it also has a mini bar for the convenience of

the customers. 6 Another high speed train is TALGO that is also air

conditioned to facilitate the customers in the hot summers of Spain.

For cost conscious customers, government owned rail network OF Spanish

State Railways or RENFE. A wide range of services is provided by the

company including first and second class seatings and special discounts for

people under 26 years of age and senior citizens.

Currently Spain is also engaged in building a road link between Barcelona

and the French Border which also includes the passage of a tunnel

underneath the mountains.

GERMANYGermany is also one of those countries that

are famous for the provision of the world’s

fastest trains. One of the popular trains is

the DeutscheBahn Intercity Express ICE with

6 http://today.msnbc.msn.com/id/21790275/

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speed ranging from 175mph to 280mph linking various cities of

Germany together.

Intercity Express,

Germany

Germany is also building up its Trans rapid Maglev (magnetic levitation) train

which can travel 342mph

Iran has also partnered with Germany to build a Maglev line between Tehran

and Mashad. Siemens AG of Germany and RENFE also signed a contract to

provide 16 high speed Velaro high speed trains for the Madrid-Barcelona

operation line. These trains have a design speed of about 350 km/hr.

FRANCEOne such company is Alstom that have produced trains with the travel speed

of above 530 km/hr. On March, 2007 it has won two high speed rail contracts

worth 350 million Euros with China which includes the

manufacturing of 500 electric freight locomotives and

building of an electrified line linking the two cities

Shijiazhuang and Taiyuan.

SNFC is the company that is running France railway networks .it is also

operating TGV trains (Trains à grande vitesse) are very popular in France

which not only provide dining service, but also have a nursery for children,

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sockets for computer plugging, vending machines installed across the

train etc. currently the TGV trains are the World’s fastest conventional

trains with speed capability of up to 574.8 km/hr.

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JAPANJapan was the pioneer in building railway network for

high speed travel. Railway lines in Japan are

operated by Japan Railway Group companies. The

famous Shinkansen trains

are also operated by the JR group. The trains are

able to withstand the earthquake and typhoon prone

environment with travelling speed of 300 km/hr.

Japan continues to refine its capabilities in the bullet

train category and the country is also working side by side on the Maglev

system as well claiming to achieve eventually a world record speed of 581

km/hr. The train known as the JR-Maglev is the world’s fastest non-

conventional train. Russia is in talks with Japan to build bullet train lines

running to the Black Sea resort of Sochi which won the bid to host the 2014

Winter Olympic Games.

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CHINA7

The country that is becoming a major economic power already has also

placed great emphasis on the rail networks as well. The Ministry of

Railways reported to have received RMB

3 billion of foreign funds for the

development and up gradation of

China’s railway sector in 2006.

Considering the population size and the demand in the country the

government is encouraging further foreign investment in this

important and significant sector.

As mentioned earlier the contract that was signed with the French Company

Alstom will allow the travelling time to be even more efficient than that

compared to air travel because the network will link one city centre to the

other.

Lang Guoping, Deputy Head of the preparation tram with the Beijing-

Shanghai passenger line company stated that 80 % manufacturing of these

high speed trains will be done in China. The country has

also established joint ventures with Siemens of Germany,

Alstom of France, Kawasaki of Japan and Bombardier of

Canada.

7 http://www.chinaeconomicreview.com/logistics/category/railways/page/6/

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China is also developing its own Maglev trains that can travel up to

speeds of 500 km/hr. In 2003, it built a maglev link from Shanghai to

its main airport which was made using German Technology.

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RAILWAY TECHNOLOGY AND TYPES OF HIGH-SPEED TRAINS

RAILWAY GAUGEThe rail gauge is basically the distance that is present between the parallel

railway lines. There are basically three types of rail gauge that is used

Narrow Gauge (about 3 ft 6 inches width)

Standard or International Gauge (4ft 8.5 inches)

Wide gauge (above 4ft 8.5 inches width)

There is a shift from narrow to standard gauge because the Standard gauge

has a greater over hauling capacity and is suitable for moving at much faster

speeds than narrow gauge. At times dual gauge are used which have 3-4

parallel railway lines that allow trains having different widths to travel on the

same path.

ELECTRIC TRAINS1. This type of locomotive derives its power from the following external

sources

2. Overhead lines or Third Rail. Usually the electric trains have three rails,

2 of the rails are used for the wheels of the train with the third rail

having overhead cables that carry current. The overhead wires can

carry voltage of up to AC 25,000volts. In Japan and France the

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electricity to run electric trains use nuclear power source. Others

use fossil fuels to generate the electricity.

3. Rechargeable energy storage system such as a battery can also be

used

In various countries of the world electric trains are being used, indeed one of

the World's fastest trains the TGV of France and the Shinkensen of Japan is

also an electric train. The infrastructure to develop the rail track is extremely

expensive and can only be possible through Government's financial support.

The cost to electrify the train would be equal to the cost of building the track

itself. The trains are having the following characteristics

4. The trains are almost noiseless as there is no engine or exhaust noise

5. Maintenance cost is also low.

6. In developed countries it is frequently used where there are frequent

stops such as for commuter rail service, and in areas with an advanced

network.

7. The trains will be benefit in those countries where there are depleting

oil reserve

8. They are more environment friendly than diesel locomotives if being

produced from renewable resources

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DIESEL-ELECTRIC LOCOMOTIVESThe second option that can be considered is the introduction of diesel-

electric trains. With such trains a diesel engine is basically used to provide

the power to an electric generator that basically drives the vehicle, it can be

suitable during those journeys where there is a problem of availability of an

external power source. Although the technology has been brought about

after that of electric trains, still many countries are using the trains and

secondly it also avoids the extensive costs required for infrastructure

development that is required for electric locomotives. USA for example had

de-electrified certain networks and has increase usage for diesel trains

because of their flexibility and low infrastructure costs.

The train is also more fuel efficient than the electric locomotive if the

external power source is taken into consideration that drives the electric

trains.

The diesel electric technology apart from being used in trains is also used in

buses, submarines, ships cars and trucks.

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MAGLEV TRAINThis type of train has revolutionized the railway industry. The train can reach

record level speeds of above 581km/hr. This is because of the fact that it

does not need wheels to move as it travels above ground level with the help

of electro-magnetic induction thereby greatly reducing ground friction with

only the presence of negligible air resistance. The train operates using three

major components.

A powerful electric power source

Large guidance magnets attached to the underside of the train

A track lined with metal coils

Although the train can carry large number of passengers and does not cause

pollution, the magnets used demand a large supply of electricity hence are

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very expensive to operate. The Shanghai Maglev train started

operations in 2001-2002 which was built using the technology of

Siemens.

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PAKISTAN RAILWAYS

HISTORY OF PAKISTAN RAILWAYS

The possibility of Karachi as a sea port was first noticed in

the middle of 19th century. Sir Henry Edward Frere was appointed

Commissioner of Sindh after its annexation with Bombay in 1847 and sought

permission from Lord Dalhousie to begin a survey for a sea port. He also

initiated the survey for a railway line in 1858. It was proposed that a railway

line from Karachi City to Kotri, steam navigation up the Indus and Chenab

rivers up to Multan and from there another railway to Lahore and beyond be

constructed.

It was on 13 May 1861, that the first railway line was opened for public traffic

between Karachi City and Kotri, a distance of 105 miles (169 km). The line

between Karachi City and Kiamar was opened on 16 June 1889. During 1897

the line from Keamari to Kotri was doubled.

The railway line from Peshawar to Karachi closely follows Alexander’s line of

march through the Hindu Kush mountains to the Arabian Se. Different

sections on the existing main line from Peshawar to Lahore and Multan and

branch lines were constructed in the last quarter of 19th century and early

years of 20th century.

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The four sections, i.e., Scinde (Sindh) Railways, Indian Flotilla

Company, Punjab Railway and Delhi Railways, working in a single

company, were later on amalgamated into the Scinde, Punjab & Delhi

Railways Company and purchased by the Secretary of State for Indi in 1885,

and in January 1886, it was named North Western State Railways, which was

later on renamed as North Western Railway.

At the time of independence, 1,947 route miles (3,133 km) of North Western

Railways were transferred to India, leaving 5,048 route miles (8,122 km) to

Pakistan. In 1954, the railway line was extended to Mardan and Charsada,

and in 1956 the Jacobabad-Kashmore 2 ft 6 in (762 mm) gauge line was

converted into broad gauge. In 1961, the Pakistani portion of North Western

Railways was renamed Pakistan Railways. The Kot Adu-Kashmore line was

constructed between 1969 and 1973 providing an alternative route from

Karachi up the country

Pakistan Railways is the state-owned railway company of Pakistan. It is a

large organization under the administration of the Pakistani Government's

Ministry of Railways. Pakistan Railways provides an important mode of

transportation in the farthest corners of the country and brings them closer

for business, sightseeing, pilgrimage and education. It has been a great

integrating force and forms the life line of the country by catering to its

needs for large scale movement of people and freight Pakistan Railway

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comprises 8,775 route km, 781 stations and 42 train halts. It has a

fleet of 546 diesel electric locomotives, 25,815 wagons and 2,099

passenger coaches. Maintenance is provided by three major locomotive

workshops and thirty-five smaller workshops.

RAIL STATISTICS OF PAKISTAN

total Length : 8,163 km

broad gauge: 7,718 km 1.676-m gauge

(293 km electrified)

narrow gauge: 445 km 1.000-m gauge

(2006)

MAJOR ROUTES

The total length of railway tracks in Pakistan is 5,072 miles (8,162 km). The

busiest routes include:

Peshawar-Karachi Route

Peshawar-Quetta Route

Lahore-Sialkot Route

Lahore-Faisalabad Route

Faisalabad-Khanewal Route

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Major Stations and Junctions

The major stations and junctions between Peshawar and Karachi include:

Peshawar,Darya Khan,Mianwali,Bhakkar,Kaloorkot Nowshehra Jn.,

Attock City, Rawalpindi, Jhelum, Lalamusa Jn., Gujrat, Wazirabad Jn.,

Gujranwala, Lahore, Lahore Cantt., Raiwind Jn., Okara, Sahiwal,

Chichawatni, Mianchannu, Khanewal Jn., Multan Cantt., Lodhran Jn.,

Bahawalpur, Samasatta Jn., Khanpur, Rahim Yar Khan, Sadiqabad,

Pannu Aqil Cantt., Rohri Jn., Khairpur, Bhiria Road, Nawabshah, Tandu

Adam, Hyderabad Jn., Kotri Jn.,Jangshahi, Landhi Jn., Karachi Cantt. And

Karachi City.

The major stations and junctions between Peshawar and Quetta are:

Peshawar to Rohri Jn. (same as above), Sukkur, Shikarpur, Jacobabad

Jn., Dera Murad Jamali, Sibi Jn., Ab-e-Gum, Mach Spezand Jn and Quetta

MAJOR RESPONSIBILITIES Improving Quality of Service

Reducing Expenditure

o Cut down further on electric consumption

o Reduced the work force by another 5000 employees through

attrition and rationalization

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o Sui Gas connections will be handed over to Sui Northern Gas

to avoid extra expenditure on bulk supply

Increasing Revenues

o Purposed performance indicator

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REVENUE RECEIPTS

Year

Passenger Freight Other

Earnings

 

(Rs)

Overall

Earnings

 

(Rs)

PKMsEarning

(Rs)TKMs

Earning

(Rs)

2003-04 22.8 8.2 4.9 4.6 1.7 14.5

2004-05 23.2 8.6 5.5 5.2 1.9 15.7

2005-06 23.7 90. 6.3 5.9 2.0 16.9

2006-07 24.3 9.5 7.3 6.9 2.3 18.7

2007-08 25.0 10.0 8.4 7.9 2.5 20.4

2008-09 25.8 10.7 9.6 9.0 2.8 22.5

2009-10 26.8 11.7 11.1 10.4 3.1 25.2

2010-11 27.9 12.9 12.7 11.9 3.6 28.4

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PAKISTAN RAILWAYS DEVELOPMENTAL PLANS 2005-108

The below mentioned plans are the midterm plans that the organization

intends to complete in the time period of five years; it is significant to note

that currently Pakistan Railways has not included the feasibility study for

metro train in its mid tern plan.

1. Up gradation and improvement of track from Khanpur to Lalamusa

2. Dualization of Track from Khanewal to Raiwind and Shahdara to

Lalamusa

3. Setting up of a railway yard and railway linkage from Gwadar port to

container yard

4. Rail link from Gwadar Port to existing rail link at Ahmad wall on Quetta

Taftan section

5. Up-gradation of Rohri – Quetta – Taftan section

6. Feasibility Study for provision of rail link from Dina to Mirpur AJK

7. Improvement and rehabilitation of old and obsolete signaling system

on Karachi – Peshawar section in phases

8. Electrification of Lahore – Khanewal double line section with

rehabilitation of existing single line Lahore – Khanewal section

9. Procurement/ manufacturing and assembly of 100 passenger coaches

10. Other minor projects

8 http://pakrail.com/Dir%20of%20Plan%20&%20PrivMRI17031.asp

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The estimated cost of completing the above mentioned projects is

approximately Rs. 124 Billion.

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MODERNIZATION ACTIVITIES9

The major emphasis of Pakistan Railways has been on the replacement of

overage assets. Due to resource constraint, however, it is now engaged in

modernizing certain areas as best as it can. These include the following:-

To ensure more comfortable journey it has been decided to

manufacture only lower class air-conditioned coaches in future.

All second class coaches are being provided with cushioned seats.

Reservation work has been computerized on modern lines at Lahore

and Karachi stations; the system's two major reservation centers.

Computerization of reservation offices of Peshawar, Rawalpindi,

Faisalabad, Multan and Hyderabad is in progress and is likely to be

commissioned shortly. The steps are now underway to link these

stations with other major railway stations.

Closed circuit televisions have been introduced at Lahore, Karachi,

Multan and Faisalabad railway stations. This entertainment is being

extended to Sukkur, Rawalpindi and Peshawar stations in the next

phase. Subak Kharam and Shalimar trains have also been provided

with closed circuit televisions and this system is being provided in

Subak Raftar also.

Public address system is being provided in Subak Raftar, Subak

Kharam, and Tezgam and Khyber Mail trains.

9 http://www.asiatradehub.com/pakistan/railways.asp

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Modernization of Karachi, Quetta, Hyderabad, Multan, Lahore,

Faisalabad, Rawalpindi and Peshawar Railway stations, removal

of hindrances on railway platforms and up gradation of approach

roads are being carried out.

Private Sector is being encouraged to participate in the activities of

the system. As a first step, ticket selling and ticket checking on

Lahore-Faisalabad and Lahore-Narowal-Sialkot Sections have been

privatized.

Feasibility study for a high-speed track is in hand.

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GOVERNMENT POLICIES

GOVERNMENT REGULATION & POLICIES (INTERNATIONAL)10

Throughout the world, the rail industry historically has been one of the most

extensively regulated of all sectors. Price, entry, exit, financial structure,

accounting methods, vertical relations, and operating rules have all been

subject to some form of government control. The public utility paradigm of

government regulation has been applied on the assumption that the

economic characteristics of the rail industry preclude competitive

organization or the need for market responsiveness.

In the past three decades, however, policymakers and economists have

become increasingly critical of traditional regulation of the rail industry. It is

generally accepted that in markets where rail carriers seek to meet demand,

there is often effective competition and that government restrictions on the

structure and conduct of firms in this industry impose considerable costs on

society. Misguided regulatory policies have been blamed for the

misallocation of freight traffic among competing modes of transport, excess

capacity, excessive operating costs, and poor investment decisions.

Regulatory controls have also shouldered much of the blame for the poor

financial condition of railroads, the deterioration of rail plant, the suppression

10

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and delay of cost-reducing innovations, and the mediocre quality of

rail service.

GOVERNMENT REGULATION & POLICIES (NATIONAL-PAKISTAN)The government has decided to restructure Pakistan Railways (PR) into a

public sector corporation in the process of developing a commercial

approach and introducing professional management and private investment.

The restructuring will be part of a major reform exercise to revitalize

Pakistan Railways to enable it to play its due role within the transport sector

and in the economic and social development of the country, the sources

said.

Pakistan Railways Corporation will focus on core business of rail services,

while the non-core business entities such as factories, schools, hospitals and

marketing of land assets will be managed through subsidiary public limited

companies which would function under the administrative control of the

Ministry of Railways through a holding company.

The manufacturing units of Pakistan Railways; the Carriage Factory,

Islamabad; Locomotive Factory in Risalpur; and Concrete Sleeper factories

each at Sukkur, Khanewal and Kohat will be transformed into separate

companies under the company laws of the country.

There are certain benefits relating to this reform exercise:

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1. It would offload railway budget from the non- core activities

2. It would facilitate manufacturing units to have their autonomous entities for seeking

business from the private enterprises

3. It would facilitate preparation corporate plans and feasibility for their future operations and

implementation strategy.

4. The manufacturing units will follow a policy for developing indigenous capabilities of the new

companies to design, manufacture coaches, locomotives and sleepers by developing research

and development activity, design centre, human and capital formation

5. It would lessen dependence on foreign manufactures and develop potential to compete in

foreign markets.

Pakistan Railways had recently launched the Bhambore Express to cater

to the requirements of the working class running between Rawalpindi and

Karachi via Sargodha, Faisalabad and Multan; it would take twenty-five

hours to complete its journey in. the introduction of high-speed train

would reduce the time to 8 hours approximately which would in turn make

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it easier for the citizens to travel on longer routes without

hesitation.

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CONTINGENT LIABILITIES

Contingent liabilities are costs which the government will have to pay if a

particular event occurs. These are obligations triggered by a discrete but

uncertain event. Contingent government liabilities are associated with major

hidden fiscal risks; a common example of a contingent liability is a

government-guaranteed loan. At the time a guarantee is entered into there

is no liability for the government, since this is contingent upon the borrower

failing to repay the loan as contracted. However, in the event of default, the

lender can invoke the guarantee and the government will be obliged to

repay the amount of the loan still outstanding. At that point, the contingent

liability will become an actual liability of the government, and a payment

must be made.

EXPLICIT CONTINGENT LIABILITIES:

These are specific government obligations defined by a contract or a law.

The government is legally mandated to settle such an obligation when it

becomes due. For example

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• Guarantees for borrowing and obligations of provincial governments

and public or private entities.

• Umbrella guarantees for various loans (SME loans, agriculture loans)

• Guarantees for trade & exchange rate risks

• Guarantees for private investments

• State insurance schemes.

IMPLICIT CONTINGENT LIABILITIES:

These represent a moral obligation or expected burden for the government

not in the legal sense, but based on public expectations and political

pressures. For example;

• Defaults of provincial governments and public or private entities on non-

guaranteed debt and other obligations.

• Liability clean-up in entities being privatized

• Bank failures

• Disaster and relief financing.

• Failure on other non-guaranteed funds.

According to Table 1 and 2 in the appendix , During FY 2004-05, an amount

of Rs.3.24 billion has been paid on account of debt servicing

liability(Government guaranteed loans) and the implicit contingent liabilities

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added up to Rs. 3.95 billion for the same fiscal year which undoubtedly

a huge amount. These figures are significant because of the fact that

before permitting Pakistan railways to invest in a project as expensive as the

introduction of bullet train, it is imperative to completely analyze the overall

feasibility of the project so that in the near future the budget can be saved

from the contingent liabilities.

CURRENT CHANGES IN POLICIES

Railways to improve privet partnership in freight investment 11- NLC (National Logistics

Council) in joint collaboration with a Dubai based group has offered Pakistan

Railways to operate their own container coaches between Karachi and

Lahore in cargo operations. PR currently has only a four per cent share of

the total freight business activity; the scope is tremendous and

opportunities for growth are unlimited as Pakistan is becoming a business

hub between Europe, Central and Middle East in the coming years. The

volume of business can be doubled in no time as there is great demand

11 http://www.pak-times.com/2007/12/08/railways-to-involve-privet-partnership-in-freight-investment/

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from the business community of Pakistan to increase the number of

fast cargo wagons from Karachi downwards. As a matter of fact High

capacity express container trains have been introduced, which operates

daily between Karachi and Lahore.

Open Track Policy 12- This policy was initiated by Pakistan Railways to improve

the efficiency and overall business opportunity of the organization.

According to this policy the private parties can operate their own rolling

stock while paying track access charges to Railways; this would basically

bring in some extra money in addition to the fact that these foreign

companies may be influenced to get their wagons manufactured at Carriage

Factory Islamabad and Mughalpora Workshop Lahore. This would not only

save the foreign exchange but also provide financial gains to Railways which

is already involved in manufacturing of such wagons at international

standards.

Pakistan Railways & Pakistan Post 13- Pakistan Railways and Pakistan Post signed an

agreement under which Pakistan Post will book railway tickets and seats in

16 cities of the country; with the passage of time this facility would be

extended to the whole country.

12 http://www.pak-times.com/2007/12/08/railways-to-involve-privet-partnership-in-freight-investment/13 http://www.pak-times.com/2007/08/29/pakistan-railways-pakistan-post-sign-deal-for-railway-booking-in-16-cities/

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Railway Ministry is trying to improve train food 14- Pakistan Railways has decided

to contact owners of renowned restaurants to serve food on major trains at

subsidized rates and has sent a proposal in this regard to the Prime

Minister’s secretariat for approval. Pakistan Railways Advisory and

Consultancy Services (PRACS) is currently responsible for managing food

services on almost all major trains. Railways authorities have warned PRACS

several times that if they do not improve the standard of food and service PR

would award the tender to restaurants or caterers. The ministry has now

proposed that PRACS will handle the catering but would get the foodstuff

from elsewhere in order to improve the overall quality of food.

Ministry allows Mobilink to install PCO’s at railway stations 15- Pakistan Railways has

allowed Mobilink to operate and install PCO facility at railway stations across

the country on urgent basis as they have realized that it is unjustified to

deprive over 80 million passengers and their relatives who visit railway

stations throughout the year, of this facility which makes them communicate

on cheaper rates. Mobile PCOs would also be introduced in near future

enabling rail passengers to be in contact with their families while travelling.

14 www.dailytimes.com.pk/default.asp?page=2007%5C06%5C30%5Cstory_30-6-2007_pg7_19 - 38k15 www.app.com.pk/en/index.php?option=com_content&task=view&id=23571&Itemid=2 - 35k

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OVERALL INDUSTRY ANALYSISThe rail supply industry has successfully adapted to changing market

conditions arising from deregulation, market concentration and globalization.

Today, the worldwide market for rail technology represents a business

volume of EUR 103.3 billion. 70% of the overall market is accessible to

suppliers; the rest is work conducted by rail companies or municipal public

transport authorities themselves. Over the next ten years, the rail industry is

expected to grow at a real growth rate of 2% per year. The most important

growth markets will be Eastern Europe, CIS and Asia Pacific.), the continuing

liberalization of the rail market as well as railway maintenance needs will

create new opportunities for the supply industry. According to a study

commissioned by UNIEF (Association of the European Railway Industries)

16the markets of 41 countries have been analyzed, the analysis represents

approximately 1.5 million kilometers of tracks and 4.1 million units of rolling

stock.

The industry was strong in the past and is currently showing positive trends

as well. According to an analysis conducted by Roland Berger Strategy

Consultants on behalf of the Association of European Railway Industries

(UNIFE), the total world market for the rail supply industry is estimated at

16

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EUR 103 billion, with an expected annual growth of between 1.5% and

2.0%1 over the next decade (see picture 1).

Picture 1: Market volume and growth, overall rail market [EUR bn]

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There certainly exist excellent market prospects for mass transit and

mainline systems as this particular industry is playing a major role in

the world economy as mentioned above earlier. There are various reasons as

to why the growth rate of 2% has been quoted, a few of them are mentioned

below:

Growing rail traffic volume will play a role, as will heavy urbanization

and economic growth in emerging markets

Governments are showing increasing support for the development of

railways and public transport

Rail transportation plays an important part in the sustained

development of their economies

By2015 passenger traffic will have increasedby30% and

freighttrafficby70%;

50% of the world's population today lives in urban areas. By 2020 this

proportion will have increased to 60% (in Europe it is already

75%)Strong need for mass transit systems

For travel times of less than 4 hours, high speed trains are more

frequently used than airlines

High-speed rail traffic in Europe has tripled in the last ten years

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These figures definitely highlight the fact that a practical step has to

be taken by all the countries to cater to this future need and that great

business opportunities exist for the organizations involved in this Transport

industry.

Markets in Eastern Europe, CIS and Asia are showing the strongest growth.

Within the next few years, these markets are expected to see annual growth

exceeding 3%. This can be explained by the economic and population

growth in these regions, where the rail infrastructure is outdated or

underdeveloped. For example, China is the clear forerunner and is quickly

developing its rail and subway network.

In Western Europe and the NAFTA countries (US, Canada, Mexico), where the

rail network and rolling stock are well developed and firmly established,

markets remain important because of their sheer absolute volume. Despite

low annual growth rates that hover between 0.5 and 1%, Western Europe

remains the rail supply industry's biggest market, accounting for 32% (EUR

34 billion) of total business. The light rail segment sees the highest growth

in the Western European market, with annual growth rates of 3%. The

service, rolling stock and passenger car segments are also growing at above-

average rates. The NAFTA region accounts for 22% (EUR 22 billion) of

market volume.

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The development of particular segments in individual countries and

regions will vary depending on factors such as national policy and

procurement programs. A country’s economic growth also affects

development. Not surprisingly, the markets with the fastest growth are to be

found in developing industrial countries. Segments with higher-than-average

growth rates are the mainline superstructure in Asia, locomotives in CIS and

Eastern Europe, and metro rolling stock in Asia. Whilst rolling stock will grow

strongly in Eastern Europe over the next decade, in Western Europe business

will remain stable.

The existing installed base in the 41countries analyzed in detail comprises

4.1 million units of rolling stock and 1.5 million km of track – twice to the

moon and back. Upkeep – maintaining and replacing existing systems at the

end of their useful lifespan – is, and will remain, a key factor driving the rail

supply market. Services – relating both the rolling stock and infrastructure –

account for almost half of the total market. Furthermore, around 70% of

annual deliveries of rolling stock (for infrastructure even 80%) is as

replacement rather than for fleet or network expansion.

Europe, NAFTA and the Asia/Pacific region are the key markets today (see

picture 2). Yet this is a dynamic, ever-changing industry. Eastern Europe and

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the Commonwealth of Independent States (CIS) will gain importance in

the coming years. Western Europe, although growing at only 0.5% to

1% annually over the next decade, will remain the single most important rail

market. NAFTA, with its impressive services market, is in second place.

However, Asia is expected to show higher growth rates, thanks to rapid

development in this region. Rail suppliers are companies that manufacture

and service all the systems, sub- systems and components used in modern

urban, conventional and high-speed systems, including rail infrastructure,

rolling stock, and signal and telecommunication systems. While a handful of

multinational suppliers dominate the headlines, the sector is shaped equally

by the thousands of small and medium-sized suppliers and sub-suppliers.17

Picture 2: Market volume, overall rail market [EUR bn]

17

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TREND ANALYSISA Survey was conducted with a sample size of 60 students from various

universities; the sample size included male and females within the age

bracket of 19 to 25 years of age.

The questionnaire has been attached in the Appendix for reference.

When asked about the opinion of the students on what factors may act as a

threat to the feasibility of bullet train in Pakistan, the below mentioned were

the factors underlined by the students:

1. Infrastructure

2. Government Policies

3. Demand

4. Affordability

5. Terrorism

From a total of 60 students 57% believed that infrastructure was a major

threat whereas 5% said that the government policies would create

hindrances. 10% believed that affordability with reference to the customer’s

is going to be a major threat while 28% students believed that the current

political situation with reference to terrorism would make the project

unfeasible to take up in Pakistan. It is important to note that 0% out of the

60 students believed that there existed no demand for the train; all of them

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believed that there was a gap between the supply and demand of the

travelling services provided to our population.

Another question was asked about whether Siemens should personally look

after and supervise the bullet train project or should the government of

Pakistan be given the responsibility. In answer to that 60% of the students

voted for Siemens whereas 32% of them said that the government of

Pakistan should be given the responsibility; it should also be noted that 8%

of the students suggested that the project should be handed over to China.

57%

5%

10%

28%

Why would the Bullet Train Project not be Feasible?

InfrastructureGovernment PoliciesDemandAffordabilityTerrorism

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60%32%

8%

Should Seimens Supervise the Bullet Train Project?

Yes No Why Not China?

To analyze the general understanding of the public towards the introduction

of bullet train we asked them if according to them it was possible to take

such an initiative. 5o% of the students agreed whereas 30% negated any

chances of such a project being initiated in Pakistan; 20% were not sure

about the possibility or impossibility of the project.

50%

30%

20%

Is the Introduction of Bullet Train Feasible in Pakistan?

Yes No May be

To analyze the importance of different national routes on which the service

could possibly be introduced; another question was asked. 47% of the

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students would prefer to go to Lahore, 29% would like to go to Karachi,

and 4% to Peshawar, 4% to Quetta and 16% would like to travel to all

these routes via the train service.

47%

29%

4%4%

16%

Percentage of People Travelling From Rawalpindi to Different National

Routes

Lahore KarachiPeshawer QuettaAll the above mentioned cities

We first surveyed the sample size on the fact that how many of the total

number of students actually travel by train and with what frequency. 45% of

them travelled rarely, 29% travelled occasionally, 16% were frequent while

10% of the students did not ever travel by a train.

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45%

29%

16%

10%

Percentage of People Travelling by Train

Rarely Ocassionally Frequently Never

After analyzing the percentage of people travelling by train we set out to

determine the preferences of these students with reference to the mode of

transport while travelling on national routes. 52% of the students preferred

travelling by airplane while 20% of them wanted to travel using their

personal conveyance; 21% availed the services of bus whereas only 7%

would prefer to travel by train.

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The same survey was conducted with a sample size of 50 individuals forming

the different population; the individual survey were mix of male and females

in the age bracket of 30 to 55 years with a pay scale ranging from Rs. 20,000

to Rs. 70,000

According to these figures it can be predominantly analyzed that 88% of the

population in this segment preferred Siemens over the government of

Pakistan when it came to the supervision of the entire project. There was no

individual voting for china as the project supervisor.

52%

20%

21%7%

Mode of Transport that is Prefered on National Routes

Airplane Car Bus Train

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88%

12%

Should Seimens Supervise the Bullet Train Project?

Yes No Why Not China?

The introduction of bullet train is feasible according to 38% of the population

of this particular sample, interestingly 38% of them are not sure as to

whether it would be possible to do so or not; 24% believe that it is not in any

case possible for such a project to be initiated in Pakistan.

38%

24%

38%

Is the Introduction of Bullet Train Feasible in Pakistan?

Yes No May be

62% of the people would prefer to travel to Lahore by the train, whereas only

25% of them would like to travel to Karachi via the railway service. There

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were 13% who opted for the route of Peshawar while none of them

wished to travel to Quetta or all the cities through this service.

62%25%

13%

Percentage of People Travelling From Rawalpindi to Different National

Routes

Lahore KarachiPeshawer QuettaAll the above mentioned cities

This trend shows that 89% of this population rarely users the services of

Pakistan Railways, with 5% people travelling occasionally, 4% frequently and

2% of the people have never travelled by the train.

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89%

5%4% 2%

Percentage of People Travelling by Train

Rarely Ocassionally Frequently Never

The mode of transport normally preferred while travelling on national routes

is the airplane with percentage of 72% whereas 28% of the population

prefers to travel by their personal conveyance. 0% of the people from this

sample size wish to take a bus or train.

28%

72%

Mode of Transport that is Prefered on National Routes

Airplane Car Bus Train

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CONSUMER BEHAVIOR TOWARD HIGH SPEED TRAIN

In order to find out the degree of brand loyalty the consumers generally have

toward the existing services of Pakistan Railways, we carried out another

survey in which we asked our prospective consumers about which mode of

transport they would prefer travelling on for the national routes. 62% of the

entire population size of the first sample would prefer using the train

whereas 72% population from sample 2 would use the service of the high

speed train if available.

SIEMENS GENERAL STATUS IN THE MARKETA survey was also carried out to find level of awareness and willingness of

people with reference to the fact that if Siemens would be a viable option for

supervising and implementing the project. This survey also gave us a good

feedback, we found out that Siemens is a brand well known to a majority of

buyers and their services are rated as very good if compared to that of the

Chinese manufacturers by the majority of our consumers; 8% of the

population from sample 1 did not want the project to be handed over to

China which is a clear signal to the fact that they understand that Siemens

would be n appropriate option as they provide quality services. Hence these

surveys gave us a go sign to carry on with the plan.

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SEGMENTATION

SEGMENTATION ACCORDING TO OCCASIONSThe customers are also grouped according to different occasions when they

get the idea of visiting their relatives. For example, their sales of the high

speed train service would increase in summers as people with children get

the only time for recreation in summers because of the summer vacations of

their children. Further, people from Rawalpindi & Islamabad often visit

Lahore during the Eid holidays and other important occasions.

FREQUENCY OF VISITS OF CUSTOMERS Customers are also segmented on the basis of the frequency of their visits

i.e. the first time customers, regular customers and potential customers. The

high speed train service would definitely have various set of customers

ranging from the everyday commuters to the occasional customers; a high

percentage of potential customers would be the corporate individuals.

Segmentation

Frequency of Visit Income Level Social Class Type of

Customer Ocassions

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INCOME LEVEL As the rates of the resort are high as compared to the existing hotels

in Murree, except for PC Bhurban, therefore only the higher income group

can afford their services, Room rates range from Rs. 4000-6000 per night.

Similarly food rates are also high and for the serving of food in the

customer’s room, extra 15% is charged from them.

SOCIAL CLASSThe management of the resort is looking for sophisticated and educated

customers in order to maintain the top-quality standards of environment that

the resort is providing. The Service would target people who want to enjoy

their journey in a peaceful & time efficient atmosphere.

TYPE OF CUSTOMERSThe customers coming to the Hotel are mainly divided into two major groups

i.e. corporate and non-corporate customers. Corporate customers are those

who come as delegates for conferences or recreation. And would also include

the population from different working segments of our society, Non-

corporate customers include students, families and anyone who can afford

the ticket.

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PROPOSED LOGO AND NAME:Proposed logo and name for bullet train in Pakistan is BURAQ EXPRESS,

which means a fast running horse. This is due to the localized name and

religious attachment Muslims have to BURAQ.

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TRANSPORT INDUSTRYThe transport industry plays a very important role for the economy. For businesses

the sector is important so that goods can be moved from one place to another. For

example, the raw materials can be transported from where they are produced to

the factory site where they will be converted into finished products. Indeed, some

businesses such as TCS and OCS are responsible to deliver cargo and other

deliverables from one customer to another at the lowest possible time so that the

deliverables can be reached faster. Then there are people who need to travel for

different purposes, either for business or for personal reasons.

For the railway industry, and particularly for the Lahore-Islamabad route, there are

various competitors that are present in the market. It is very important to analyze

these competitors and what they are doing to facilitate the customers in order to

come up with a better and more appreciable service. Secondly, as a high-speed

train project requires a huge financial investment in the development of the

infrastructure as well as the cost getting the superior technology, Siemens needs to

manage these prospects affectively.

According to a World Bank report,

The transportation sector accounts for about 10.5 percent of the country’s GDP and 27.4

percent of Gross Fixed Capital Formation (GFCF) in FY06. It provides over 6 percent of

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employment in the country and receives 12 to 16 percent of the annual Federal Public

Sector Development Program (PSDP). Government agencies dominate the sector.18

MAJOR LOCAL COMPETITORSNow there are two kinds of competitors that are present in the market. One is the

direct competitor and the other are indirect competitors. In the transport industry

the following will be the direct competitors of Siemens for specifically the Pindi-

Islamabad route.

DIRECT COMPETITORS

Express and Non-express Trains

At present the trains are being run by Pakistan Railways under the monitoring of the

Ministry of Railways. Passenger traffic accounts for about 50% of the total railway

traffic.

There are currently two trains that have the speed such that they are able to cover

the Pindi-Lahore route in less than 4 hours. These include the following trains

18 http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/EXTSARREGTOPTRANSPORT/0,,contentMDK:20699058~menuPK:869060~pagePK:34004173~piPK:34003707~theSitePK:579598,00.html

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Subak Raftar express: which leaves Lahore at 7.45 am and reaches at 12.30 pm

Islamabad non-stop: that leaves Lahore at 7 am and reaches at 11.05am.

The Margalla Express: This leaves at 6 pm and reaches at 10 pm.

It is to be noted that all these fast trains are travelling only at one time from Lahore

to Rawalpindi and in turn one time from Rawalpindi to Lahore. Apart from that

there are various other trains that are being used for passengers to travel from

Lahore to Rawalpindi route the journey varies to 5 to 8 hours.

LAHORE JN. RAWALPINDI

  Train Name   Train

Code

  Direct

ion

Arrival   Departu

re

Arrival   Depart

ure

  Khyber Mail   1   UP   9:30:00

PM

  10:10:00

PM

  3:30:00

AM

  3:55:00

AM

  Tezgam   7   UP   2:10:00

PM

  2:40:00

PM

  8:20:00

PM

  

  Awam

Express

  13   UP   8:00:00

AM

  8:30:00

AM

  2:25:00

PM

  2:50:00

PM

  Margala   109   UP      6:00:00   10:00:00   

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Express PM PM

  Jaffar

Express

  39   UP   12:35:00

PM

  1:15:00

PM

  7:15:00

PM

  

  Subak Raftar

Express

  101   UP      7:45:00

AM

  12:30:00

PM

  

  Night Coach   105   UP      12:30:00

AM

  4:35:00

AM

  

  Islamabad

Non-Stop

  107   UP      7:00:00

AM

  11:05:00

AM

  

  Quetta

Express

  23   UP   11:10:00

AM

  11:55:00

AM

  6:30:00

PM

  6:50:00

PM

  Subak Khram

Express

  103   UP      4:30:00

PM

  9:15:00

PM

  

  Jinnah

Express

  47   UP   3:20:00

PM

  3:50:00

PM

  8:35:00

PM

  

  Sir Syed

Express

  49   UP   3:20:00

PM

  3:50:00

PM

  8:35:00

PM

  

  Nishter

Express

  51   UP   3:20:00

PM

  3:50:00

PM

  8:35:00

PM

  

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  Rawalpindi

Express

  111   UP      1:00:00

PM

  5:15:00

PM

  

  Passenger   327   UP      11:00:00

PM

  7:10:00

AM

  7:50:00

AM

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RAWALPINDI LAHORE JN.

  Train Name   Train

Code

  Direct

ion

Arrival   Departu

re

Arrival   Departu

re

  Margala

Express

  110   DN      7:00:00

AM

  11:00:00

AM

  

  Khyber Mail   2   DN   1:25:00

AM

  1:50:00

AM

  8:00:00

AM

  8:40:00

AM

  Tezgam   8   DN      8:00:00

AM

  1:45:00

PM

  2:15:00

PM

  Awam

Express

  14   DN   12:45:00

PM

  1:10:00

PM

  7:00:00

PM

  7:30:00

PM

  Jaffar

Express

  40   DN      6:00:00

AM

  10:50:00

AM

  11:20:00

AM

  Subak Raftar

Express

  102   DN      4:30:00

PM

  9:20:00

PM

  

  Subak

Khram

Express

  104   DN      7:30:00

AM

  12:15:00

PM

  

  Night Coach   106   DN      12:30:00

AM

  4:35:00

AM

  

  Lahore Non-

Stop

  108   DN      6:00:00

PM

  10:00:00

PM

  

  Quetta

Express

  24   DN   10:40:00

AM

  11:00:00

AM

  5:35:00

PM

  6:15:00

PM

  Jinnah

Express

  48   DN      2:30:00

PM

  6:35:00

PM

  7:05:00

PM

  Sir Syed

Express

  50   DN      2:30:00

PM

  6:35:00

PM

  7:05:00

PM

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The strength of travelling by the trains is the following.

Frequent trips

Currently there are about 16 trains that travel from the Rawalpindi to Lahore

journey. This leads to greater travel options for the customers.

Lower costs

Compared to other modes of travel for Quality conscious customers, the rail travel

provides comparatively lesser costs for the customers. The parlor cars are having

comfortable seats. Secondly, the Chinese trains are also providing the customers

with better services than before, with free lunch boxes and drinks.

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Miscellaneous

Another advantage specially associated with this type of travel is the washroom

facility available on the train. This aspect is very important for many people when

choosing their travel. Especially for those mothers who have small babies to take

care off and certain patients who suffer from health problems.

Secondly, certain snack items and even meals can also be purchased in the train

and some even offer to sell newspapers and local magazines.

The view also plays a role for many people especially when they travel in the

morning time as they are able to enjoy it.

Trains are more efficient in fuel consumption in per passenger per kilometer travel

than in fuel consumption Well established high speed rail systems in use today are

more environmentally friendly than air or road travel. This is due the following

factors

lower energy consumption per passenger kilometer

reduced land usage for a given capacity compared to motorways

displaced usage from more environmentally damaging modes of transport

Weaknesses

The weakness that is associated with the system is lower quality compared to other

services such as Daewoo and Air travel (although it is justified by the price)

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Secondly, most of the trains are taking longer time to reach to specific places

about 5-6hours on average. The railway industry in Pakistan compared to

China the locomotives are 1/8 times productive and 1/3 time to that of India .The PR

has a very low and stagnant market share, carrying less than 10 percent of

passenger traffic and 5 percent of freight.

Road TransportAccording to the statistics put forward by the World Bank, road travel was currently

the most frequent mode of travel being used not only for passenger travel purposes

but also to transport goods from one place to another. Currently road travel in

Pakistan carries about 80% of the total traffic. Due to developments in the

improvement of the infrastructure there has been an increase in transport and now

it is catering to almost 90% of the total passenger traffic and 96% of the Freight

traffic which means that the other modes of travel have very less market share.

National Highway AuthorityLike Pakistan Railways managing the railway sector, the responsibility of building

highways and motorways lies with NHA. The objectives of NHA is the development,

management of operations, maintenance and planning of the particular networks.

Over the past NHA has been engaged in the development of the following

programs19:

M-1: Islamabad to Peshawar (155 km access-controlled

motorway with 6 lanes)

M-2: Lahore to Islamabad (367 km access-controlled

19 http://en.wikipedia.org/wiki/Transport_in_Pakistan

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motorway with 6 lanes)

was completed in

November 1997.

M-3: Pindi Bhattian to Faisalabad (53 km access-controlled

motorway with 4

Lanes.

M-4: Faisalabad to Multan (200 km access-controlled

motorway with 4 lanes)

M-5: Multan to Dera Ghazi Khan (65 km with 4 lanes)

M-6: Dera Ghazi Khan to Ratodero (450 km with 4 lanes)

M-7: Kakkar to Karachi via Dureji (303 km with 2 lanes)

M-8: Gwadar to Ratodero (1072 km with 2 lanes)

M-9: Karachi to Hyderabad (136 km with 6 lanes)

M-10: Karachi Northern Bypass (56 km with 2 lanes)

SLM: Sialkot Lahore Motorway (100 km with 6 lanes)

NHA is managing 3% of the total entire road network and about 75% of the

country’s road traffic.

As our focus is on the Rawalpindi- Lahore Motorway route, we would focus our

attention to the Motor Way M2. Other projects being carried out by NHA is National

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Highway Improvement Programme (NHIP) and National Highway

Development Sector Investment Programme (NHDSIP)

LAHORE TO ISLAMABAD MOTORWAY M2

The motorway was developed in 1996. The network has basically 6 lanes and

provides exits to various other cities that come between Lahore and Islamabad. The

motorway was developed by Daewoo at a cost of Rs 36.7 billion. The length of the

motorway is about 335 km.20

The major passenger travel service is being offered by Daewoo which is availed by

the middle and upper middle class. However other players are also present in the

market such as buses of Niazi, New Khan and Skyways that are being used by the

lower class segments.

Apart from the fuel prices that the customers pay while travelling in their own cars,

the customers have to pay toll taxes when they use the motor way (Given below)

20 http://www.nha.gov.pk/FAQs/FAQs.asp

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SAMMI DAEWOO BUS SERVIVEThe most popular transport service provider across the various destinations of

Pakistan is undoubtedly provided by Daewoo. For the Lahore to Rawalpindi route

there are currently travel 35 times daily, with average seating capacity of about 40

seats. The service is extremely popular for the Lahore – Rawalpindi route mainly

because of the security it offers along with the good service.

Toll Rates for Motorways

Vehicle Type

Car, Jeep, Land Cruiser/Pajero, Suzuki Van/Pick up

or Equivalent

Detail

s

Rs.

15/-

Wagons (upto 12 Seats), Pick up all types modified

to carry passengers (Toyota Hilux single/ double

Cabin), Milk Trucks T-3000 and equivalent.

Detail

s

Rs.

25/-

Coasters, Mini Buses (upto 24 Seats), 13-24 seats

Coaster Mini Bus built on T-3500 Mazda Chassis

(upto 24 seats) and Mini Truck / Tanker built on T-

3500 Mazda

Detail

s

Rs.

25/-

Busses greater than 25 seats Detail

s

Rs.

40/-

Rigid Trucks including 2 Axle, 3 Axle Trucks Detail

s

Rs.

50/-

Articulated Trucks/Vehicles Detail

s

Rs.

100/-

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TIMINGS OF DEPARTURE As the bus leaves on average after every half an hour it increases the

convenience of the customers. Mostly the buses reach and depart at time but it

depends on the traffic in the cities to which there have been instances when the

journey takes about 5 hours than the scheduled time of 4.30 hours.

OTHER SERVICES FOR CUSTOMERS The customers are offered snacks along with drinks. Furthermore, it has contracts

with certain stop over points along the journey where passengers can use

washrooms and get meals. Furthermore they also provide head phones and have

LCDs where movies are played.

Another service that they offer is for those who have to travel to Islamabad. The bus

stops over and moves from the G7 sector of Islamabad and the charges are mere Rs

20.

TICKET PRICE The ticket price for the normal bus is about Rs480 for the Lahore Rawalpindi route

while the recently started Royal Decker buses cost about Rs 75021. This is because

of more comfortable seats and better service offered to the customers.

21 http://sammi.com.pk/fares.asp

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DRAWBACKS OF ROAD TRAVELApart from the motorway which has a good infrastructure, the other networks

are below standards. Trucks speed are slower when compared to those in Europe

hence it means that they take longer hours to reach which inturn means that the

goods take a very long time to travel from one place to another. Secondly they are

obsolete causing a lot of pollution.

This pollution also increases when people use their own cars when compared to

using other modes of transport, with the increase in the number of cars travelling

and lesser implementation of environmental standards there has been increased

pollution.

Furthermore, construction of roads due to rapid urbanization and growth in

population has resulted in massive destruction of landscapes and trees.

AIR TRAVELPakistan has currently about 36 operational airports across the country. PIA is the

national carrier but other airlines are also present in the market. There are currently

about more private airlines apart from PIA which are Air Blue, Shaheen Airways and

Aero Asia. All the airlines are covering the Lahore to Islamabad route

SHAHEEN AIRWAYS AND AIRBLUEThese two airlines are present in the industry but none is offering their service from

Lahore to Islamabad route. Hence, it is only PIA that is travelling on this route which

in turn means limited option for the customers to reach on time.

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This is a very interesting fact that we came across with. For time conscious customers the

airline industry is offering limited services and that too it is very expensive.

PIAIt is currently the only available airline that is catering to the Rawalpindi-Lahore

route. It Travels on the Lahore Islamabad route about 5 times daily, the ticket price

is about Rs 7500 but it is subject to change. The flight time is about 50 min.

DrawbacksThere is still a major potential in Pakistan for the air travel industry and according to

we sources the CAA should encourage commercialization and increase competition

within the industry.

The major drawback compared to other modes of transport is that air travel is

extremely expensive. The tickets for the Islamabad Karachi route is similar to that

of Karachi Dubai

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OVERALL OVERVIEW

Since road travel accounts for the maximum portion of traffic and hence even

earnings, there is considerable need to develop further the infrastructure to develop

the passenger traffic. Recent programs undertaken by authorities like NHA and

NASPAC has resulted in tremendous improvement in the road travelling sector. The

major threat that will be present for the bullet train is the competition from Daewoo.

As mentioned earlier, there is increased customer reliance on the services of

Daewoo in road travel. There are other buses two private and local that travel on

the route and competition exists for those customers who are not price sensitive

and like mentioned earlier this is not our target market.

In air travel, competition exists from the only airline that travels in the Lahore-

Islamabad route and that is PIA. As the price of the tickets are extremely high and

the time also comparable to that will be provided by the Bullet train, it is going to be

advantageous as well.

Coming towards the direct competitors, the Pakistan Railways although providing

frequent travel options throughout the day and improved services in the future can

be a threat for the Bullet train service. Still it is incomparable in terms of the time

that it takes to travel the distance.

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When compared to air travel rail schedule fewer weather disruptions, and at

times the time can also become comparable. This is because, for air travel

you need to be at the airport at least an hour before the flight take off, apart from

the time taken to travel.

In car travel you can travel any time you want to and reach the exact destination.

Rail travel has specific time and u need to take a taxi to travel from the station to

the destination

Like a road is required for the car to run, proper infrastructure and planning is

required for the train to run. This means that for rail travel a high amount of

investment will be required and profitable returns may not be present in the short

term

TIME REDUCTION THROUGH BULLET TRAINBy reducing the time of travel it will benefit both the businesses and the

passengers. For passengers, it will be possible to travel to places earliest and also

at a cheaper cost than a plane. They can avail the facility to attend business

meetings in other cities much more conveniently. For businesses, the freight can be

delivered at a much lesser time therefore orders can be managed and cost

effectiveness earned. It will in turn make the industry more competent.

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ENVIRONMENTAL FACTORS

Comparison of pollution caused by high-speed railways compared to road and air travel

Research was carried out by that compared the emission of various pollutants in UK

in 2001. The research focused on f main emissions namely PM10 , HC, and NOx and

SO2. It was noted that

car transport has very much higher emissions of PM10, CO, HC, and NOx than either

rail or air. Domestic aircraft and cars have similar emissions of SO2, though both

lower than rail. Cars have similar CO2 emissions to domestic aircraft on longer

flights, but lower CO2 emissions on shorter trips. Rail has significantly lower CO2

emissions than either mode.

When compared with the air travel the Carbon Dioxide emission in aircrafts during

landing and take-off is the same regardless of the journey travel, hence it means

more emissions in shorter journeys than longer ones. Domestic aircraft have

emissions of 200-300 gCO2/passenger km compared to around 40 gCO2/passenger

km for high-speed rail.

On the other hand, SO2 emissions of high speed rail are greater when compared to

the aircraft. Emissions of SO2 will be greater for aircrafts in shorter journeys than

high-speed rail and vice-versa for longer journeys.22

22http://images.google.com.pk/imgres?imgurl=http://www.cfit.gov.uk/docs/2001/racomp/racomp/images/02.gif&imgrefurl=http://www.cfit.gov.uk/docs/2001/racomp/racomp/03.htm&h=327&w=544&sz=10&hl=en&start=14&um=1&tbnid=-hef9O-cfj_1QM:&tbnh=80&tbnw=133&prev=/images%3Fq

%3Drail%2Btrack%2Bof%2Belectric%2Btrain%26svnum%3D10%26um%3D1%26hl%3Den%26sa%3DN

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SWOT ANALYSIS OF BULLET TRAIN23

STRENGTHSTime Efficiency – Our complete journey time would be approximately 1 hr

10 minutes compared to the 5 hrs taken by any normal train.

Existing Expertise - New trains with Siemens technology rolled out in

Mumbai and their active participation in 3 key international airports being set

up or modernized in India highlights the fact that Siemens has the expertise.

Consumer Preference – According to the customer analysis conducted 88%

of the first sample wanted Siemens to supervise the project whereas 60% of

the population of the second sample also voted n favor of the company; it

should also be noted that 8% of the population insisted that China should not

be an option considered by the government for such an extensive project.

Approximately 2.5million travel through train especially after the

introduction of certain reforms by Pakistan Railways

23 http://dawn.com/2007/05/11/nat16.htmhttp://www.dawn.com/2007/02/11/nat8.htm

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Facilitating the Business Community by allowing the traders to

send cargo in a short span of time, this will increase the

efficiency of the businesses and in turn be beneficial for the economy

as a whole

Can provide employment opportunities for the local population

Travelling time is reduced

WEAKNESSESOverall cost – The whole set up would be very expensive and with reference

to Chinas availability as an option, Pakistan could always give preference to

the lowest bidder. The current challenge that Siemens had faced was

because of the fact that China had recently taken Siemens market share of

the Boosters.

No Existing Infrastructure – The organization would definitely have to start

from the scratch when it comes to the infrastructure as no such project has

been earlier undertaken and implemented apart from the LMTR which would

reach into its completion stages by 2015 and the infrastructure developed by

them would be different comparatively in addition to the fact that the service

would be available only within the vicinity of Lahore

High cost

Establishment of a separate network to run the trains

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Expensive

Unstable Political Scenario in the country

Suicide attacks and killings leading to a threat to security

“They are getting bigger, better and faster than ever” Aaron

Dalton Forbes Traveler, Nov 15th, 2007

THREATS Political instability can actually render the project void; for example the

bullet train project initiated during the Nawaz Sharif regime was

cancelled as soon as he was taken over by another Prime minister.

The current Electricity/Gas crisis has made the life of the entire

population miserable, various small and large businesses have been

affected; therefore this energy crisis may threaten Siemens existing

efficient work processes.

China could act as a major threat with reference to the bidding price as

they would possible charge the lowest price in case the project reaches

the bidding stage.

Delay in the project acceptability would bring about a substantial

increase in the overall cost of the project; the current feasibility would

no longer be applicable then and a new report will have to be worked

upon from the scratch. For example in the 1990s in the Kalabag Dam

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project feasibility report, the costs calculated were doubled in

the next 20 years when the project was being critically examined

with reference to the implementation.

OPPORTUNITIES Growing Needs of the economy of Pakistan in general and the growing

transportation needs of the local population is an opportunity. The

existing modes of transport are not accommodating the whole of

population.

Time is an environmental factor that can be cashed upon as none of

the existing services have been able to bring a balance in the time and

the price of the services being provided.

First mover advantage is going to act as another significant

opportunity as Siemens would be the first international brand to enter

Pakistan with reference to the bullet train.

The news of privatization of Pakistan Railways has been spreading like

fire; Siemens can take part in the biding process.

Due to the Open Track Policy being initiated by the government for

Pakistan, Siemens can jump in for the partnership in providing these

freight services in the country.

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Investment to prevent the current energy crisis

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COMPARISON OF TRAINS WITH OTHER MODES OF TRANSPORT

Trains are more efficient in fuel consumption in per passenger per kilometer

travel than in fuel consumption Well established high speed rail systems in

use today are more environmentally friendly than air or road travel. This is

due the following factors

Lower energy consumption per passenger kilometer

reduced land usage for a given capacity compared to motorways

displaced usage from more environmentally damaging modes of transport24

When compared to air travel rail schedule fewer weather disruptions, and at

times the time can also become comparable. This is because, for air travel

you need to be at the airport at least an hour before the flight take off, apart

from the time taken to travel.

COMPARISON OF HIGH SPEED TRAINS VERSUS NORMAL TRAINS

COST EFFECTIVENESSKeeping the infrastructure costs aside high speed trains are more cost

effective than normal trains because of two reasons:

24 http://en.wikipedia.org/wiki/High-speed_rail

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The staff is usually paid per hour therefore less pay would have to be

given out to them. The revenue is based on the distance traveled,

which would in turn increase the revenue to cost ratio because the

customers will have to pay for the distance that they travel, and the reduced

time would in turn mean lesser pay given out to the employees hence the

revenue to cost ratio will decrease in this regard. However, it should also be

noted that the customers will be paying a higher fare hence expecting good

service for which training of the staff would have to be undertaken to

improve the interaction with the customers. This cost would also be in turn

paid off, because revenues as the price of the ticket will be comparatively

higher than when compared to normal trains out of the value that the

customers get.

TIME REDUCTIONBy reducing the time of travel it will benefit both the businesses and the

passengers. For passengers, it will be possible to travel to places earliest and

also at a cheaper cost than a plane. They can avail the facility to attend

business meetings in other cities much more conveniently. For businesses,

the freight can be delivered at a much lesser time therefore orders can be

managed and cost effectiveness earned. It will in turn make the industry

more competent.

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DISADVANTAGESIn car travel you can travel any time you want to and reach the exact

destination. Rail travel has specific time and u need to take a taxi to travel

from the station to the destination

Like a road is required for the car to run, proper infrastructure and planning

is required for the train to run. This means that for rail travel a high amount

of investment will be required and profitable returns may not be present in

the short term.

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EXISTING RAILWAY TRACK OF PAKISTAN

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INVESTMENT POLICIES OF PAKISTAN:

Policies of host countries have an important influence on foreign investment

decisions. Host countries can adopt policies of stimulating foreign investment

or they can restrict foreign participation in their economies in various ways.

Host country policies and policy pronouncements affect the perception of

“political risk” by transnational corporations (TNCs) and thereby the amount

of investment of these companies. In addition, host country policies can be

instrumental in channeling investment flows toward sectors considered to be

of particular importance to the country’s development.

Pakistan was basically an agricultural economy upon its independence in

1947. Its industrial capacity was negligible for processing locally produced

agricultural raw material. This made it imperative for succeeding

governments to improve the country’s manufacturing capacity. In order to

achieve this objective, however, changing types of industrial policies have

been implemented in different times with a changing focus on either the

private sector or the public sector. During the 1960s, government policies

were aimed at encouraging the private sector while during the 1970s; the

public sector was given the dominant role. In the 1980s and 1990s, the

private sector was again assigned a leading role. Especially during the

decade of the 1990s, Pakistan adopted liberal, market-oriented policies and

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declared the private sector the engine of economic growth. Moreover,

Pakistan has also offered an attractive package of incentives to foreign

investors.

The private sector was the main vehicle for industrial investment during the

1950s and the 1960s and the involvement of the public sector was restricted

to three out of 27 basic industries.5 It was also set that in the event of

private capital not forthcoming for the development of any particular

industry of national importance, the public sector might set up a limited

number of standard units. By the late 1960s the economy was largely

dominated by the private sector in important areas like banking, insurance,

certain basic industries, and international trade in major commodities.6 The

services sector was reserved for local investors. Foreign investment was not

allowed in the field of banking, insurance, and commerce.

On 1 January 1972, the GOP issued an Economic Reforms Order taking over

the management of ten major categories of industries,7 commercial banks,

development financial institutions, and insurance companies. In 1975 there

was another round of nationalization of small-sized agro processing units.

The sudden shift toward nationalization of private sector industrial units

shattered private investors’ confidence. At the same time there was also

acceleration in the direct investment by the public sector in new industries

ranging from the basic manufacture of steel to the production of garments

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and breads. The status of the public sector as a catalyst and gap filler

in the 1950s and 1960s changed to that of repository of the

“commanding heights” of the economy (see Government of Pakistan 1984).

All foreign investment was, however, exempted from the purview of the

nationalization.

After the dismal performance of the industrial sector following the 1972

nationalization, a change occurred in September 1978 in the government’s

approach toward the role of the public and private sectors. The role of the

public sector was restricted to consolidating existing enterprises, and further

investment in this sector was strictly restricted. The role of the public sector

was elaborated in the industrial policy statement enunciated in June 1984.

The statement reiterated that the government would continue to pursue a

pattern of a mixed economy, with the private and public sector reinforcing

each other. At the same time it admitted that the public sector had

established its managerial and entrepreneurial foundations and was in a

position to chart its future course to create a supportive relationship between

the public and private sectors. Industries like steel, fertilizer, cement,

petroleum refining and petrochemicals, and automotive equipment

engineering were still in the realm of the public sector. The private sector

was, however, permitted to participate in these fields as these were not an

exclusive preserve of the public sector anymore.

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The industrial policy statement of 1984 not only accorded equal

importance to the public and private sectors but also encouraged the

private sector to come forward. However, the process of privatization was

not initiated. Had this been initiated, Pakistan might have attracted a

considerable amount of foreign direct investment in subsequent periods. The

public sector retained its role in major industrial areas, which obviously

discouraged the inflows of FDI. The procedure for obtaining permission to set

up an industry was somewhat restrictive. The government sanction for some

categories of investment was considered essential to ensure that the major

projects of national significance or in need of government’s pricing policy

and other support measures were established with government knowledge

and involvement. The government’s sanction was required for setting up

projects in the following categories:

(i) Industries specified for reasons of overcapacity; price regulation; and

implementation of a program of assembly-cum-manufacture, requiring

indigenous manufacture of components or projects of major national

importance or for religion, security, or socioeconomic objectives

(ii) Projects involving foreign private investment

(iii) Large projects costing PRs 300 million and above

(iv) Projects requiring cash foreign exchange of more than PRs 50 million

equivalents for plant and machinery

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(v) Projects involving the import of secondhand machinery

(vi) Projects in which more than 60% of the raw material was

importable, provided the value of each import exceeded 20% of the total

investment in fixed assets

The industries included in the above categories required the clearance of the

Central Investment Promotion Committee (CIPC) and the approval of the

Federal Government. The above-mentioned restrictions and the need to

obtain permission for setting up an industry in these areas where applicable

to both local and foreign investors. In addition to this, all project proposals

involving foreign investment required government approval and were

required to be filed in the first instance with the Investment Promotion

Bureau (IPB). Foreign private investment was encouraged in the form of joint

equity participation with local investors and in the areas where advanced

technology, managerial and technical skills, and marketing expertise were

involved. Adequate legal framework for foreign investment was provided

through the Foreign Private Investment (Promotion and Protection) Act 1976.

This Act provided for security against expropriation and adequate

compensation for acquisition. The Act also guaranteed the remittance of

profit and capital, remittance of appreciation of capital investment, and relief

from double taxation for countries with which Pakistan had agreement on

avoidance of double taxation. Foreign investment was also encouraged in

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industrial projects involving advanced technology and heavy capital

outlay like engineering, basic chemicals, petrochemicals, electronics,

and other capital goods industries.

In order to encourage foreign direct investment in export-oriented industries,

an Export Processing Zone (EPZ) was set up in Karachi. Apart from foreign

investors, overseas Pakistanis were also encouraged to invest in industrial

projects in the EPZ on a nonrepatriable investment basis. The concessions

and facilities offered by the EPZ included duty-free imports and exports of

goods and tax exemptions. Overseas Pakistanis were exempted from

disclosing the origin of the funds for investment and were allowed to bring

secondhand machinery without any surveyor certificate. Despite these

incentives, the highly regulated nature of Pakistan’s economy proved a

deterrent to the inflows of FDI. Specifically, FDI was discouraged by:

(i) significant public ownership, strict industrial licensing, and price controls

by the GOP;

(ii) the inefficient financial sector with mostly public ownership, directed

credits, and segmented markets; and

(iii) a noncompetitive and distorting trade regime with import licensing, bans,

and high tariffs.

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Pakistan began to implement a more liberal foreign investment policy

as part of its overall economic reform program toward the end of the

1980s. Accordingly, a new industrial policy package was introduced in 1989

based on the recognition of the primacy of the private sector. A number of

policy and regulatory measures were taken to improve the business

environment in general and attract FDI in particular. A Board of Investment

(BOI), attached to the Prime Minister's Secretariat, was set up to help

generate opportunities for FDI and provide investment services. A “one-

window facility” was established to overcome difficulties in setting up new

industries.

The basic rules on foreign investment as stated above were laid down in the

Foreign Private Investment (Promotion and Protection) Act 1976. Originally,

each foreign investment was subject to separate authorization, but this

requirement was eliminated in May 1991. In general, no special registration

was required for FDI, and the same rules and regulations were applied to FDI

as to domestic investors. The requirement for government approval of

foreign investment was removed with the exception of a few industries such

as arms and ammunition, security printing, currency and mint, high

explosives, radioactive substances, and alcoholic beverages (in fact, these

industries were also closed to domestic private investors). In all industrial

sectors other than those indicated above, not only foreign equity

participation of up to 100% was allowed but also, foreign investors can

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purchase equity in existing industrial companies on a repatriable basis.

In nonindustrial sectors, foreign investment was excluded from

agricultural land; forestry; irrigation; and real estate including land, housing,

and commercial activities. All investors, whether domestic or foreign, were

required to obtain a No Objection Certificate (NOC) from the relevant

provincial government for location of their projects. Thus, the physical

location of the investment was effectively controlled by the provincial

governments, which was considered a major bottleneck in speedy

industrialization. At present, an NOC is only required for foreign investment

in areas that are in the negative list of the relevant provincial government.

There are only a small number of areas that are on the negative list of the

provincial governments.

In the past, investors (domestic and foreign) were not free to negotiate the

terms and conditions of payment of royalty and technical fees suited to the

requirements of foreign collaborators for technology transfer. The

government, therefore, streamlined the procedures and investors are now

free to negotiate the terms of conditions suited to them as well as

acceptable to multinationals wishing to transfer the requisite technology.

One of the most important measures taken recently by the government

affecting FDI has been the liberalization of the foreign exchange regime.

Residents and nonresident Pakistanis and foreigners are now allowed to

bring in, possess, and take out foreign currency, and to open accounts and

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hold certificates on foreign currency. Foreigners using foreign

exchange have now access to the capital market. For example, no

permission is required to issue shares of Pakistani companies to foreign

investors, unless they belong to industries included in the Specified List. To

further liberalize the foreign exchange regime, the Pakistani rupee has been

made convertible effective 1 July 1994. The ceiling earlier imposed on

contracting foreign loans has been abolished. Permission of the Federal

Government or the SBP would not be required regarding interest rate or

payment period of foreign loans not guaranteed by the Government of

Pakistan. Foreign currency account holders are now also allowed to obtain

rupee loans collateralized against the foreign currency account balance.

The government has also enacted an extensive set of investment incentives

including credit facilities, fiscal incentives, and visa policy. Foreign-controlled

manufacturing companies exporting 50% or more of their production can

now borrow working capital without any limit. Other foreign-controlled

manufacturing companies including those not exporting and selling in the

domestic market can borrow rupee loans equal to their equity without prior

permission of the SBP. Prior permission of SBP is also not required for raising

domestic credit to meet fixed investment requirement.

A number of fiscal incentives include a three-year tax holiday to all industries

throughout Pakistan set up between 1 December 1990 and 30 June 1995.

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Investments in delineated rural areas, industrial zones, and less

developed areas enjoy five and eight years tax holiday respectively,

together with special custom duty and sales tax concessions. The import

policy has also been liberalized considerably, and the maximum tariff rate

has been reduced from 225% in 1986/1987 to 45% in 1996/1997. A large

number of quantitative restrictions and nontariff barriers have been

removed, and the negative and prohibited lists of imports have also been

reduced (see BOI 1995b).11 Export incentives have also been broadened.

The highly cumbersome duty-drawback system is being replaced with a

scheme whereby 80% of the duty-drawback is paid automatically within

three days to the firm, and the remaining 20% is paid within one week after

inquiry. The visa policy of Pakistan has been modified to make it attractive to

foreign investors. Foreign investors with substantial investment are granted

3 years multiple entry visa. There is no restriction/requirement for work

permit for foreign managerial and technical personnel for gainful

employment/occupation in private firms in Pakistan. Special industrial zones

(SIZs) have been set up to attract foreign investment in export-oriented

industries. Apart from foreign investors, Pakistanis working abroad are also

eligible to invest in SIZs. The government is responsible for providing the

necessary infrastructure and utility services in the SIZs. Investment in SIZs is

exempted from existing labor laws of the country. Hefty fiscal incentives are

given to foreign investors in the SIZs, which include income tax holiday for a

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period of 10 years provided the plant commences commercial

operation as of 30 June 1999; duty-free imports of plant and machinery

not manufactured locally; and tax exemption on capital gains, to the extent

of the foreign equity share, for a period of five years from the inception of

the venture.

Foreign investment in Pakistan is protected through the Constitution

(Article 24) as well as through specific laws. Section 8 of the Protection of

Economic Reforms Act 1992 provides legal cover to foreign investment in

Pakistan. Beside these statutory protections, the Multilateral Investment

Guarantee Agency (MIGA) provides a means of obtaining insurance cover

against noncommercial risks. Pakistan is a top beneficiary of the MIGA

investment cover. MIGA has provided Pakistan with 9.4% of its investment

insurance facilities, the highest among other developing countries. In

November 1997, the government issued the New Investment Policy which

includes major policy initiatives. In the past, foreign investment was

restricted to the manufacturing sector. Now foreign investment is allowed in

sectors like agriculture and services, which constitute above three fourths of

gross national product. The main objective of the new policy is to enhance

the level of foreign investment in the fields of industrial base expansion,

infrastructure and software development, electronics, engineering, agro-

food, value-added textile, tourism, and construction industries. Foreign

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investment on a repatriable basis is now also allowed in agriculture,

services, infrastructure, and social sectors, subject to these conditions:

(i) The basis is joint venture (60:40);

(ii) foreign equity will be at least $1 million;

(iii) Foreign companies registered in Pakistan will be allowed to invest; and

(iv) For social sector and infrastructure projects, joint venture is waived

(100% foreign equity may be allowed).

The manufacturing sector has also been prioritized into four categories:

(i) Value-added or export industries;

(ii) Hi-tech industries;

(iii) Priority industries; and

(iv) agro-based industries. The tariff on imported plant, machinery, and

equipment (PME) that are not manufactured locally for categories (i), (ii), and

agriculture is zero while that for categories (iii),

(iv), and social services will be charged 10%. First year allowance of cost of

PME would be available at 90% for (i) and (ii), at 75% for categories (iii) and

(iv), and at 50% for other industries. Reinvestment allowance for expansion

would be allowed at 50% of cost of PME.

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Notwithstanding significant deregulation and various

incentives/concessions given to foreign investors, Pakistan still faces

serious problems as far as implementation of foreign investment policies are

concerned. There is a strong perception among foreign investors that the

pro-business policies and inducement used to attract prospective new

investors are somehow weak given realities when they actually begin to set

up and operate their business in Pakistan.

FDI TREND:The success of FDI policies can be judged by the size of the inflows of capital.

Pakistan has been making efforts to attract FDI and such efforts have been

intensified with the advent of deregulation, privatization, and liberalization

policies initiated at the end of the 1980s. The amount of foreign investment

rose from a tiny $10.7 million in 1976/1977 to $1296 million in 1995/1996,

thus growing at the annual compound growth rate of 25.7 percent. However,

it declined to $950 million in 1996/1997. With the beginning of the overall

liberalization program (1991/1992 onwards) the inflow of foreign investment

grew at the compound growth rate of 15.2 percent. Investment inflows in

1995/1996 increased by 93.3% mainly due to the inflow of investment in

power sector.

Although significant by absolute terms, the increase appears trivial when

compared to the relatively more buoyant economies of East and Southeast

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Asia. While FDI flows to all developing countries reached $150 billion in

1997, East and Southeast Asia received the bulk of this share. Total

foreign investment consists of direct and portfolio investment. Prior to 1991/

1992, portfolio investment has not only been low but also exhibited a

fluctuating trend. However, with the beginning of liberalization policies in

1991/1992, portfolio investment crossed the $1.0 billion mark in 1994/1995.

This impressive increase does not reflect the true picture of the trends in

portfolio investment witnessed during the post-liberalization period. If the

$862.2 million sale of Pakistan Telecommunications Corporation (PTC)

vouchers, which was a one-time phenomenon, was excluded, the portfolio

investment not only declined to $227.8 million in 1994/1995 but followed an

average trend of $215.4 million during 1991/ 1992 to 1995/1996 as against

an average flows of only $9.0 million prior to reform (1984/ 1985 to

1990/1991).

Foreign participation appears to be the major factor responsible for the

increase in portfolio investment in the 1990s. The decline in international

interest rates was also important in portfolio allocations toward Pakistani

assets. With globalization, numerous international portfolio funds were

created that were invested in emerging capital markets seeking for better

returns. Pakistan was among the first countries in emerging markets to take

measures to open up its stock markets to foreign investors. However, in

relation to the total flows directed to developing countries, interest in

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Pakistan has been very modest. Portfolio inflows, because of their

inherently volatile nature, have proved to be reversible more than

other forms in developing countries. Their potential volatility is great in

Pakistan as well since portfolio investment in Pakistan is directed mainly

toward short-term and some medium-term public debt instruments and the

stock exchanges.

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GOVERNMENT’S ECONOMIC POLICIES:

Pakistan’s track record in maintaining consistent economic policies has been

poor. The abrupt changes in policies with a change in government as well as

a change in policy within the tenure of a government have been quite

common. Pressures to raise revenues (for fiscal consideration), and other

conflicting objectives have generally led to inconsistencies in investment and

industrialization policies, and an ad hoc and changing incentive system.

Revenue measures are not in harmony with the industrial policies.

CURRENT STANDING:

Pakistan’s GDP growth rate has consistently averaged 6 percent plus during

the last four years reaching 8.4 percent in the last fiscal year, per capita

incomes have shot up to almost US$850, the incidence of poverty has

declined from 34 percent to 25 percent, unemployment rate has gone down

to 6.2 percent and the size of the economy has doubled to $130 billion.

Large scale manufacturing has grown in double digits and the cumulative

private sector credit by banking system in last three years was more than

$15 billion compared to less than $10 billion in the previous ten years. These

facts, when revealed, come either as shock, surprise or disbelief to most

observers.

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On the external front, Pakistan successfully entered international

capital markets in early 2004 and has received enthusiastic response

every year since then. Every single sovereign bond issue was oversubscribed

several times and the pricing was better than that of investment grade

countries. This was a country on the verge of default in May 1998 and had

been put in selective default category by S&P and Moody’s. Today Pakistan’s

international credit rating is Ba2 – only three notches below investment

grade. In 2006 Pakistan was able to raise more than $1 billion in 30 year and

10 year sovereign bonds in the U.S. market at fine pricing and these bonds

were heavily oversubscribed. Trade – GDP ratio has reached 38 percent –

one of the highest in South Asia region. Exports have doubled in U.S. dollar

terms in last four years attaining a level of $18 billion this year.

FDI flows have been rising every year and amounted to more than $3 billion

or 2.3 percent of GDP – the highest in South Asia. Private capital flows in

form of workers’ remittances and other current transfers are touching $9

billion annually. External debt and liabilities as ratio of GDP has declined

from almost 52 percent to 28 percent and as a percentage of foreign

exchange earnings down to 125 percent from almost 300 percent six years

ago. The myth that Pakistan is highly dependent upon official foreign

assistance and particularly that from U.S. can be gauged from the fact that

less than 9 percent of country’s foreign exchange income is derived from

official aid. ODA per capita is only $8 or 1% of Gross National income. Forex

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reserves have risen from $1 billion in 1999-2000 to $13 billion in May

2006 representing about 6 months of imports.

Of course, this exceptional economic performance in a short period of six

and a half years has given rise to some new challenges. Inflation which was

subdued at 4 percent or less in the first four years of economic recovery has

accelerated to 8 percent this year. Current account which was surplus for the

last three years has turned into a deficit of almost 4 percent of GDP due to

oil price shock and almost 50 percent increase in imports of machinery and

equipment. Income in-equalities have begun to surface as the upper income

and middle income groups have benefited disproportionately from the

consumer boom in autos, consumer electronics, real estate and stock

market. Just to give you one indicator-the domestic production of

automobiles has jumped from 30,000 in 1999-00 to 200,000 cars this year. In

addition another 50,000 cars are being imported.

The privatization process was initiated in 1991 under the Nawaz Sharif

Government, continued under the Benazir Government, and further

intensified under the Musharraf Government. Thus, there is a wide political

consensus and support for privatization because of an underlying philosophy

that the Government should not be in the business of running businesses but

regulating the markets and laying down policies. Pakistan’s record on

privatization has been impressive and this has helped in stopping the

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hemorrhaging of public finances and easing the pressures on fiscal

deficit. Pakistan’s proceeds from privatization of banks, telecom, steel

and other public enterprises were about $3 billion in the last few years.

Financial sector reforms in Pakistan were also initiated early in the 1990s

when new banking licenses were granted to private domestic banks to set up

their shops along with the nationalized commercial banks and foreign banks.

Although these reforms were implemented with fits and start, they were

accelerated in 1997 when the Nawaz Sharif Government brought in

professional managers and boards of directors consisting of reputable

persons from the private sector to manage and oversee the nationalized

commercial banks. The Central Bank was granted autonomy and the control

of the Ministry of Finance over banking institutions was diluted. Excess labor

was shed off through voluntary golden hand shake schemes and unprofitable

branches were closed down. Further reforms were undertaken since 1999

when net non-performing loans of the banking system were brought down to

less than 3 percent of total advances and loans, minimum Capital

requirements were raised to $100 million, the quality of new loans was

improved, mergers and consolidation of financial institutions eliminated a

number of weaker players and the range of products and services offered by

the banks was widened. But the most crucial policy action taken by the

Government, in my view, was the privatization of Habib Bank, United Bank,

and Allied Bank – three large nationalized commercial banks of the country.

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As a result of these reforms, the share of the private sector ownership

of the banking assets has risen to 80 percent. The banks are highly

profitable and the average lending rates had declined to as low as 5 percent

as automation, on-line banking and multiple channels of delivery improved

the efficiency of services and a healthy competitive environment set in.

Agriculture credit, SME financing, consumer loans and microcredit have

become mainstream products of the banking industry and the borrower base

of the banking system has multiplied from 1 million to 4 million households.

The middle and lower middle class which had been completely shut off from

access to banking services are now enjoying car loans, mortgages, credit

cards, consumer durables. Small farmers are using bank credit for buying

chemical fertilizers, certified seeds, insecticides and weedicides, small

implements and hiring tractor services. Small and medium entrepreneurs are

expanding their fabrication and manufacturing capacities and upgrading

technology. Landless labor and poor women in the rural areas are receiving

loans for poultry, small livestock, sewing machines, etc. The main

beneficiaries of these reforms are the customers of financial services

although it must be recognized that market determined deposit rates have

also declined significantly. But as the lending rates are surging upwards,

deposit rates are also going to depict an upward movement.

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Trade liberalization has been undertaken in Pakistan for the last 15

years and the maximum tariff rate which was as high as 250-300

percent has been brought down to 25 percent while the average tariff rate is

about 9 percent. Non-tariff barriers and para tariffs have been eliminated

and the culture of providing selective concessions, exemptions and privileges

to individual firms has given way to an across-the-board uniform rules and

regulations. Protection to domestic industry is no longer a policy objective as

in the globalized world efficiency can improve only under a competitive

environment.

The breaking down of these artificial barriers has led to significant

productivity gains and manufactured exports now account for 90 percent of

the total exports. Imports of all kinds of goods – capital, consumer, raw

materials – are freely allowed into the country at negligible import duty

rates.

Foreign investment regime in Pakistan is also highly open and liberal. There

are no restrictions or ceilings or prior approvals required for foreign investors

to set up their business in Pakistan for any sector of the economy –

agriculture, real estate, retail trade, manufacturing, services, banking,

insurance and other financial services. As long as they bring in their initial

foreign investment and register it with the Central Bank, the foreign

investors are free to repatriate their profits, dividends, royalties, technical

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fees, debt servicing, etc. through their bankers without any prior

approval. Foreign companies are allowed to raise funds from domestic

sources, including bank loans, without any restrictions. They are treated

equally with national firms in all respect and can bring in and out expatriate

staff to run their businesses.

DEREGULATION of oil and gas, telecommunication and civil aviation sectors

have also brought about significant positive results. Oil and gas exploration

activity has stepped up in recent years and constant discovery and

production from new gas fields operated by private sector companies have

added new capacity to meet the growing energy needs of the country.

Independent power producers – both domestic and foreign private

companies – have played a critical role in filling in electricity generation

requirements of Pakistan.

Telecommunication has witnessed a boom since the private sector

companies were allowed licenses to operate cellular phones. One million new

cellular phone connections are being added every month and the number of

phones has already reached about 27 million or a penetration rate of almost

20 percent. Long distance international and local loop monopoly of Pakistan

Telecommunications Corporation has been broken and new licenses

including for wireless local loop have been issued. The customers are reaping

rich dividends as the prices of phone calls – local, long distance, international

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– are currently only a fraction of the previous rates. One of the

advantages of privatization of the state monopoly, i.e., the PTCL would

be felt in form of higher bandwidth penetration that has lagged behind other

Asian countries.

Since the government recently announced the policy of allowing the private

operators to fly on international routes, there has been a big uptake in the

aviation business. Domestic airfares have been cut by PIA which had almost

a monopoly and seat load factor has reached an all time high. PIA and the

private airlines are all scrambling for new planes to meet the pent up

demand for air travel.

The cornerstone of the governance agenda is the devolution plan which

transfers powers and responsibilities, including those related to social

services from the federal and provincial governments to local levels. This

plan was put into effect in 2001. The main premise of the devolution plan is

the belief that development effort at the local level should be driven by

priorities set by elected local representatives, as opposed to bureaucrats

sitting in provincial and federal capitals. Devolution of power will thus

strengthen governance by increasing decentralization, transparency,

accountability of administrative operations, and people’s participation in

their local affairs. However, in the meanwhile the transition has created its

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own set of dislocations and disruptions in the delivery of services that

need to be addressed.

Other essential ingredients for improving economic governance are the

separation of policy and regulatory functions, which were earlier combined

within the ministry. Regulatory agencies have been set up for economic

activities such as banking, finance, aviation, telecommunications, power, oil,

gas etc. The regulatory structures are now independent of the ministry and

enjoy judicial powers. The Chairman and Board members enjoy security of

tenure and cannot be arbitrarily removed. They are not answerable to any

executive authority and hold public hearings and consultations with

stakeholders.

THE NATIONAL ACCOUNTABILITY BUREAU (NAB) has been functioning

quite effectively for the last five years as the main anti-corruption agency. A

large number of high government officials, politicians and businessmen have

been sentenced to prison, subjected to heavy fines and disqualified from

holding public office for twenty-one years on charges of corruption after

conviction in the courts of law. Major loan and tax defaulters were also

investigated, prosecuted and forced to repay their overdue loans and taxes.

Civil service reforms aimed at improving recruitment, training, performance

management, career progression, right sizing of ministries and attached

departments, and improving compensation for government employees are

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part of the second generation reforms of the government for building

strong institutions in the country. In order to depoliticize recruitment,

promotions and career development, the independence and responsibilities

of the Federal Public Service Commission (FPSC) have been enhanced and is

now fully in charge of merit based recruitment and promotions. The Civil

Service Act has been amended to reflect performance based career

progression and would enable the government to retire civil servants who

are inefficient and/or corrupt. The public sector educational training

infrastructure is also being restructured to strengthen skill based training of

civil servants at all levels.

The reforms in some of the most important federal institutions - the Central

Board of Revenue (CBR), Securities and Exchange Commission (SECP), the

State Bank of Pakistan (SBP) and Pakistan Railways - initiated some years

ago - are already beginning to take some hold and making a difference as far

as governance is concerned. Reforms in access to justice will deal with

delays in the provision of justice, case management, automation, and court

formation systems. In addition, human resources, management information

systems and the infrastructure supporting judicial system are being

revamped and upgraded. Small Causes Courts have been established to

provide relief to the poor who have small claims.

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Despite these reforms, Pakistan is facing many difficult challenges and

will continue to face new unforeseen challenges. There is no room for

complacency. One fourth of the population still lives below the poverty line.

Human Development Indicators remain low as almost half of the population

is illiterate, infant and maternal mortality rates are high, access to quality

education and health care particularly by the poor is limited, income and

regional inequalities are widespread, infrastructure shortages and

deficiencies persist, skill shortages are taking a toll in the economy’s

productivity while at the same time, there is high unemployment and

underemployment. Most worrying to me is that Pakistan’s image abroad is

quite negative. Foreigners are reluctant to visit Pakistan as they perceive the

country to be a dangerous place. The worldwide preoccupation with the large

economies of China and India and the ever-increasing quest to enter these

markets is also working to the disadvantage of countries such as Pakistan.

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LABOR FORCE:The 'informal economy' refers to modes of production and enterprises that

range from small-scale production units, home-based work in production

chains, and self-run micro-enterprises to bare- minimum economic survival

activities such as street vending, rag-picking and domestic work. These

activities remain 'informal' because workers/operators cannot comply with

the established rules and regulations of the formal sector that they find

prohibitive and costly. By virtue of being part of the

“Informal” economies, a vast majority of workers are excluded from legal

and social protection and from the scope of labor laws. 13 Of the total labor

force in Pakistan, 65.8 per cent are employed in the informal sector

compared to 34.2 per cent in the formal sector14. Of these, 57 per cent are

employees and unpaid family helpers, while 42.2 per cent are self-

employed15 in the informal sector. The majority of the employees in the

informal sector are piece-rate, home based women workers who get

extremely low wages and work under restrictive physical and social environs

of their 16 poor habitats, or at small hazardous work units. Most of the

workers are not aware of constitutional and international human and labor

laws and covenants. The in formalization of economy presents perhaps the

biggest challenge to sustainable development. On one hand, it is vibrant

sector of the economy, labor-intensive and responsive to new needs and

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opportunities. On the other hand, it is largely un-documented, which

distorts both official statistics and existing analyses of the economy's

performance. More importantly, it escapes the government's regulatory

network. Labor in the informal sector is not governed by the various labor

laws or regulations on working conditions. This means that workers have no

paid holidays, no job security, no medical cover, no pension or provident

fund, no limit on the hours worked and no overtime pay.

STATE OF LABOR UNIONS:The prevalent view in some quarters that trade unions are formed to

undertake strikes is based on ignorance of law as well as facts. The positive

role of trade unions in industrial relations has not been realized and

reflected. Unions are meant to be democratic institutions working for the

betterment of workers and indirectly for society as a whole.

Trade unions are legal entities. The Constitution of Pakistan, ILO Conventions

and UN Declarations all allow workers the right to form their associations and

unions. It is clear that a number of important issues confront the trade union

movement; foremost among these is the structure of economic activity in

the country. The fact that the informal sector extends well beyond family has

an impact on the national economy. There is a trend among employers to

redirect as much work as possible to subcontractors and daily wage earners.

This both limits the application of existing legal welfare provisions and makes

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it difficult to register unions, as non-permanent workers can simply be

disowned by the employer. This leads to a dichotomy in the labor

force. Within the existing formal sector, unions have a certain degree of

collective bargaining power and have been able to protect the wages and

conditions of workers. Permanent workers also have a large degree of job

security. Many traditional labor problems exist outside the formal sector. The

use of child labor is common in the informal sector 18(The actual total

number of working children in Pakistan is probably 19 somewhere between 2

and 19 million), working conditions are virtually non-regulated and terms of

employment are generally oppressive. Union activity on the whole is remote

from the realities facing the overwhelming majority of the labor force. If

unions are to serve their purpose of defending the interests of the working

class as a whole, they need to find ways of addressing the needs of workers

in the informal sector.

CURRENT LABOR POLICY:

According to the latest labor policy, unveiled in 2002, the right of association

was not extended to agriculture and informal workers, which comprise about

90 per cent of the work force. One of the recommendations of Pakistan

Tripartite Labor Conference (PTLC), last convened in 2001, was extension of

the coverage of labor laws to informal sector and home-based workers, but

the new labor policy failed to do that.

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The policy aims to regularize the contract system, following that, the

number of workers employed on non-permanent basis will increase.

The right to minimum wages, which is a core labor right, remains highly

restricted. According to the minimum wage policy of 2001, the minimum

wage is determined by the number of hours spent on a job. There is no way

of ensuring that home based workers are getting minimum wages working

the same number of hours.

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IMPACT OF GLOBAL TRADE:

Global trade and investment patterns are having a dramatic impact on

employment relations and work arrangements around the world. The current

state of privatization, foreign investment and the development of Free Trade

Zones unrestrained by labor laws do not add up to an environment

conducive for workers. Workers retrenched by privatization move into the

informal economy when public enterprises are closed or the public sector is

downsized. More and more people are also joining the informal economy to

supplement formal sector incomes with informal earnings in response to

inflation or cutbacks in public services. Another repercussion of globalization

is that capital-intensive growth or what some observers call “jobless growth”

is being pursued by both public and private sector. Furthermore,, “high tech”

growth, tends to create more high-skill service sector jobs than lower-skill

manufacturing jobs. In such contexts, those without the skills to compete for

high-tech formal jobs find work or continue to work in the informal economy.

There may be differences on the precise measurement of poverty but it is

widely believed that the incidence of poverty in Pakistan has increased

during the decade of 1990s. According to some studies, the caloric-based

poverty has in fact doubled from 17.4% in 1987-88 to 32.6% in 1998-99 21.

During the period of 1995 - 2000, economic growth rate declined from the

historical level of 6 per cent to 4 per cent and with population growth rate of

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almost 2.5 per cent and more, the increase in per capita incomes was

insignificant. The poor performance on economic growth was

accompanied by rising income inequality and high open unemployment

rates. Although the growth rate has improved in the past 5 years (6.4

percent in 2003-4 and 8.4 percent in 2004-5), overall unemployment has

gone up. According to the Pakistan Economic Survey of 2003-4,

unemployment rate averaged at 5.7 per cent over 1995-2000, and in 2004, it

was 8.3 percent.

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PROJECT FEASIBILITYThe project feasibility would definitely depend upon the existing projects

which are currently being taken up by the government of Pakistan. An

example would be The LRMT is a Two-phase, 97 kilometers long project. A

Hong Kong based company called MVA Asia Consultancy was hired the

government of Punjab as consultants to prepare the project feasibility. The

study of MVA Asia Consultancy completed 5% of project design and proposed

four Rail lines in the city to share the traffic burden. The proposed capacity of

LRMT is going to be able to move 35000 passengers per hour in the city.

Funding for the project will be provided by the Asian Development Bank

(ADB). But in this regard our analysis and research indicated that this project

would cost around US $1.7 billion. Financial analysis further ahead indicates

the cost breakup.

In March 2007, Punjab Government invited Dr E. Sreedharan who is the

managing director of successfully operating Delhi Metro Rail. After studying

the project details Dr Sreedharan has declared Green Line Project as a viable

one.

In 1991 during Nawaz Sharif’s term as prime minister, the feasibility of a

light rail transit system was determined by Japanese development

organization (JICA). It had proposed a 13 kilometer long system. The study

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was reviewed and updated as part of the World Bank funded “Lahore

traffic and transport studies” in 1993.

The system’s cost was estimated at about US $400 million, but with better

network coverage. In 1995 Japan proposed financing the original scheme

with grants and loans of about US $495 million, but the project could not be

implemented due to many reasons.

Hence keeping in mind previous projects undertaken by government of

Pakistan on similar pattern can indicate the willingness and acceptability or

our proposal.

ISSUES:

Barriers to entrySome of the aspects had been highlighted in the trade policy of Pakistan of

2006-2007. There were major barriers that have affected the investments in

Pakistan and are continuing to do so.

Pakistan position on Global Competitiveness scale According to the trade policy of

2006-2007 Pakistan was at 95 on global competitiveness out of a total

of 125. This index measures many aspects such as availability of

skilled labor, productive workforce, superior research and development

etc. in 2007 however; Pakistan is not seen in the World

Competitiveness Scoreboard produced by IMD. India ranks 27th on that

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Increased opportunities in neighboring countries Since there is a lot of

opportunity in the Indian and Chinese markets considering the

population size and various other factors, these two countries have

been important attractions in Asia for investment opportunities

Political uncertainty The biggest barrier is that of political uncertainty and

instability that is providing a threat to not only the foreigners but also

the local community in general. The riots that took place after

Benazir's death has shattered the confidence of investors. Benazir

Bhutto’s assassination has cast a huge shadow on the country’s

attractiveness as an investment destination, says Syed Dilawar Abbas,

President Organization of Pakistani Entrepreneurs of North America

(OPEN), Silicon Valley Pakistan has incurred massive trade deficits as

the increase in imports in luxury items such as imported cars, and cell

phones has resulted in increased imports but it was not matched up

with the exports. Economists have been deeply worried as according to

some, Pakistan did have a golden opportunity to incur global

investment when money was flowing in the country in the form of for

example foreign direct investment but this option was not cashed upon

successfully. First the emergency riots took place and later Benazir's

death that decreased the confidence of the business investors.

According to the Jan 1, 2008 The News edition 359 branches of

different banks had been ransacked, furthermore many industries were

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effected such as the Bake Parlor Factory and Steel Mills in

Karachi, destruction of railways etc. it was a pity that even the

local property was not saved. The economic managers of Pakistan

compare its economic growth with China and India but they

conveniently ignore the fact that these countries have cushioned their

currencies against devaluation by amassing foreign exchange reserves

equivalent to over a year of their import bill. The above factor hence

leads to major security concerns where nothing is termed as safe.

Lack of productive capacity because of lesser availability of technology and

investment in plant and machinery. Because of the tax treatment

offered to other type of investments such as bonds and shares, there

was a transfer from industrial to non-industrial sectors.

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FINANCIAL ANALYSIS:

The cost of the project would mainly include cost of the track, cost of the trains and

land acquisition cost. Since our company has already done projects very similar to

this current project so the cost estimates for the initial feasibility were easy to

make.

The estimated cost and its breakup are given as;

Cost of the track $1.5 billion

Cost of the trains $0.18 billion

Total Cost $1.68 billion

The operational cost of the project after its beginning would be

Cost of Train Drivers & staff

Type Salary Cost per

person / year

Total Employees Total Cost

Train Drivers $12000 6 $72, 000

Helpers on Duty $5000 6 $30, 000 = $

102,000

Finance Department / Salaries

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Type Salary Cost per

person / year

Total Employees Total Cost

Senior Manager

Finance

$50000 1 $50000

Asst manager

finance

$16000 3 $48000

Compliance officer $30000 1 $30000

Internal Auditor $20000 2 $40000 =

$168,000

Marketing Department

Type Salary Cost per

person / year

Total Employees Total Cost

Senior Manager

Marketing

$35000 1 $35000

Asst Marketing

Manager

$12000 3 $36000

Relationship

Manager

$10000 1 $10000

Manager Sales $10000 2 $20000 =

$110,000

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HR/Admin

Type Salary Cost per

person / year

Total Employees Total Cost

Country manager $100,000 1 $100,000

Company

Secretary

$14000 1 $14000

Senior Manager HR $30000 1 $30000

Asst Manager HR $10000 2 $20000 =

$164,000

Technical and Maintenance (T&M)

Type Salary Cost per

person / year

Total Employees Total Cost

Chief Engineer $80,000 1 $80,000

Manager

Operations

$40,000 4 $160,000

Asst Manager

Operations

$16000 6 $96,000

Maintenance

Officer

$5000 15 $75000 =

$411,000

TOTAL COST = $

955,000

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Electricity cost of trains:

The government of Pakistan would provide us with a 25000KV dedicated line,

which would cost us around $1.5million per year.

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RECOMMENDATION:

GOVERNMENT INVOLVEMENT:The project is being carried out by the Government of Punjab with funding

from Asian Development Bank; we believe Punjab’s Provincial Assembly

needs to pass some basic regulation for providing legal cover on who is

going to implement this project so as to avoid future conflicts. Otherwise if

the current government changes hands the project may die too. Provincial

legislature should do law making to give this project to either a subsidiary

dept of provincial

government OR a private

company or make law for a

brand new "mass transit

authority" for the city.

FUNDING/ INVESTMENT:As to funding, 60% of the

project cost is borne by the ABN Amro, CitiGroup and HSBC. It is a subsidized

loan, with a 10year moratorium on payments. 15% of the cost would be

borne by the federal government. And 15% by the government of Punjab

(partly as cash and partly as land transferred to Buraq Express Project (BEP)

for building its facilities).

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The rest is generated by the BEP through property development (and

is in fact an indirect subsidy from the Government of Punjab, since it

has provided high value land to BEP for use for property development)

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APPENDIX:

Pakistan Railway to be Made Corporation The government has decided to restructure Pakistan Railways (PR) into a

public sector corporation in the process of developing a commercial

approach and introducing professional management and private investment.

The restructuring will be part of a major reform exercise to revitalize

Pakistan Railways to enable it to play its due role within the transport sector

and in the economic and social development of the country, the sources

said.

As per the decision, Pakistan Railways Corporation will focus on core

business of rail services, while the non-core business entities such as

factories, schools, hospitals and marketing of land assets will be managed

through subsidiary public limited companies which would function under the

administrative control of the Ministry of Railways through a holding

company.

The manufacturing units of Pakistan Railways The Carriage Factory,

Islamabad; Locomotive Factory in Risalpur; and Concrete Sleeper factories

each at Sukkur, Khanewal and Kohat , It Will be transformed into separate

companies under the company laws of the country.

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The sleeper factory at Kotri will be leased out to a private sector

company. It has also been planned to lease out more factories to the

private sector; however, at least one factory will remain with Pakistan

Railways which will be converted into a company to regulate price and

ensure required supply of sleepers. Restructuring of Pakistan Railways was

initiated during 1990s for which consultants were appointed for valuation of

assets and liabilities of each of the factories. However, the government

initiated a fresh restructuring process and conducted a financial study

through consultants which among other things valued the assets and

liabilities of the Carriage Factory Islamabad, Locomotive Factory at Risalpur

and concrete sleeper factories.

The reforms exercise would facilitate the government to fulfill its objective to

offload railway budget from the non- core activities, and would facilitate

manufacturing units to have their autonomous entities for seeking business

from the private enterprises; and prepare corporate plans and feasibility for

their future operations and implementation strategy.

All manufacturing units will follow a policy for developing indigenous

capabilities of the new companies to design, manufacture coaches,

locomotives and sleepers by developing research and development activity,

design centre, human and capital formation to lessen dependence on foreign

manufactures and develop potential to compete in foreign markets.

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Iftikhar A. Khan adds: National Assembly was informed on Friday that

the government had a plan to launch Mass Transit Train service

between the twin cities of Rawalpindi and Islamabad.

In a written reply to a question during the question hour, Federal Minister for

Railways Sheikh Rashid Ahmad said Expression of Interest (EOI) along with

terms of references for conducting feasibility study of the project would be

advertised by his ministry after receiving no objection certificates from the

Punjab government and the Capital Development Authority (CDA).

Answering another question, he said the railways ministry earned over Rs11

billion through the passenger trains during year 2005-2006.He said various

steps had been taken to improve and modernize the railway service. He said

home-delivery of tickets had been introduced in Rawalpindi, Islamabad,

Lahore, Faisalabad and Karachi.

He said 25 reservation offices had been computerized and 19 others would

shortly be automated. Air conditioned dining cars with sitting area has been

introduced. New and refurbished coaches have been introduced on

passenger trains. Additional coaches are attached with trains during summer

and winter vacations.

He said nine new inter-city and long-lead trains had been introduced during

the year 2006-07 with better facilities. He said filtration plants to provide

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clean drinking water to passengers had been installed at major railway

stations.

Last updated: 2007-06-30

http://www.pakistan.gov.pk/ministries/ContentInfo.jsp?

MinID=26&cPath=326_345&ContentID=5755

Spain invited to bid

for high speed train

in Pakistan

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ISLAMABAD: Pakistan will introduce a high-speed train between

Rawalpindi and Lahore during one year that is estimated to run at a

speed of 250 to 300 kilometers per hour, said Sheikh Rashid Ahmed, Minister

for Railways, while talking to the Spanish Ambassador Jose Maria Robles who

called on him here on Monday. He invited Spanish firms to participate in the

feasibility and later on the construction of the high-speed track, the first ever

adventure in South Asia. The Pakistan Railways will start metro service in

eight major cities of Pakistan having population over 2 million, he said,

adding the feasibility studies in Karachi, Lahore and Rawalpindi and

Islamabad have been initiated and are expected to be finalized within six-

months. He said Spain which has a rich experience in metro-service is

encouraged to join Pakistan Railways in an independent capacity or joint

ventures in metro service, Pakistan Railway was keenly interested to avail

the modern technology of Spain in terms of locomotives, signal system,

passenger and freight coaches and the laying of rail tracks in order to bring

an overall improvement in the railway network and operations, he said. The

execution of work on doubling the rail track on Khanewal-Lahore 270

kilometers section has been started, which will be completed during one

year, he said, adding the completion of the project will also bring a

revolutionary change in the culture of Pakistan Railways not by improving

train timings but also by passengers' dependency. Special attention is being

focused on freight service, being major source of earning for the railways, he

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said. Presently, 900 freight coaches are plying on tracks and we have

fixed the target of increasing the number to 1,000, while freight trains

will be increased to 14 from the present ten," he added. He asked Spain to

cooperate in manufacturing of locomotives, passenger and freight coaches.

http://www.thepost.com.pk/Arc_CorpNews.aspx?

dtlid=63091&catid=8&date=10/10/2006&fcatid=14

Ministry allows Mobilink to install PCOs at railway stations

ISLAMABAD, Dec 15 (APP): Caretaker Minister for Railways Mansoor Tariq

here on Saturday said that Pakistan Railways has allowed Mobilink to operate

and install PCO facility at railway stations across the country on urgent

basis.  The Minister said, “We are taking this initiative on a number of

complaints received from the rail passengers during the visits to various

railway stations and divisions”.

Mansoor Tariq said that taking serious note of the absence of this necessary

facility at the railway stations, Mobilink has been allowed to install PCOs

immediately.

He said that it was unjustified to deprive over 80 million passengers and

their relatives who visit railway stations throughout the year, of this facility

which makes them communicate on cheaper rates.

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The mobile PCOs would also be introduced in near future enabling rail

passengers to be in contact with their families while traveling, he said.

Mansoor Tariq said that the government has offered partnership to private

sector, as it brings investment and create job opportunities.

Pakistan Railways would also engage private sector to invest in all sectors of

Railways including

DAWN NEWS – Delegation from France

KARACHI, April 11: A high-powered trade delegation from France is arriving

on Wednesday to enter into negotiations with various government

departments and agencies for the development and investment in the areas

of desalination, sewage treatment plants and mass transit system.

During its two-day stay the 25-member trade delegation from French

Business Confederation will first hold high-profile meetings in Islamabad and

will reach Karachi on Thursday.

The delegation, headed by Vinci Construction Chairman Philippe Ratynski,

will also meet City Nazim Naimatullah Khan because French company -

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Sogelberg Ingenerates - which made first ever feasibility report on

Karachi's Mass Transit System is also included in the delegation.

Pakistan France Business Alliance President Shabir Ahmed briefing the

newsmen at French Consulate's Trade Office said that the French delegation

would hold meetings with Prime Minister Shaukat Aziz, ministers, World Bank

and Asian Development Bank representatives in Islamabad.

He said during its visit to Karachi the delegation would hold meetings FPCCI

members for finding out ways and means for enhancing trade between the

two countries. He disclosed that the delegation members would also hold

meetings with Karachi Port and Defense Housing Authority for desalination

plants.

Besides, the Karachi Water and Sewerage Board (KWSB) is also expected to

hold a meeting with the French team in connection with sewage treatment

plants and desalination plants, he added. The French trade mission

comprises heavy machinery, aviation and pharmaceutical manufacturers,

heavy construction, aviation, electronics, water technology and desalination,

power, transport, marine, and telecommunication.

http://www.dawn.com/2005/04/12/ebr7.htm

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DIRECTORATE OF PLANNING AND PRIVATIZATION

MINISTRY OF RAILWAYS ISLAMABAD

Pakistan Railways has already launched modernization with rehabilitation

and improvement plan both for its infrastructure and rolling stock including

prime mover since 2001-2002. The ongoing schemes worth over Rs. 30

billion are progressing satisfactorily and have brought in radical

improvement in the overall efficiency and performance of the system. During

the current financial year the Railway Revenue generation target has been

increased from Rs. 14 billion to Rs. 18 billion and it is planned to achieve

zero operational deficit during the current year by effective planning and

financial management on latest technique. The performance during the mid

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review i.e. first six month shows the operational surplus of Rs. 927

million against the target for the period.

Pakistan Railways plans to achieve a stage of net profit from the year 2007

and accordingly a number of targets have been set out by the Government

for Pakistan for achievement by 2007 and onward up to 2010. This target

include increase in the sectional speed on Karachi – Lalamusa main line

section to 140 KMPH, dualization in the missing link of track on the main line,

introduction of modern and latest version signaling system, procurement of

diesel and electric locomotives as well as high capacity/ high speed freight

wagon and passenger coaches beside improvement and provision of

connectivity to Iran, India, upcoming Gwadar Port to Afghanistan and onward

up to Turkmenistan

To achieve the above targets number of developmental schemes have been

proposed in the mid term plan 2005-10 which have in principally been

agreed/ approved and hopefully would be reflected in the approved mid term

plan before the end of the financial year 2004-05. The schemes are indicated

hereafter:-

Pakistan Railways Developmental Plans 2005-10 (Mid

Term Plan)

Estimated Cost

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Rs. Billion     

i) Up gradation and improvement of track from Khanpur

to Lalamusa

3.50

ii) Dualization of Track from Khanewal to Raiwind and

Shahdara to Lalamusa.

7.00

iii) Setting up of a railway yard and railway linkage from

Gwadar port to container yard.

2.50

iv) Rail link from Gwadar Port to existing rail link at

Ahmad wall on Quetta Taftan section.

12.00

v) Up-gradation of Rohri – Quetta – Taftan section 15.00

vi) Provision of Railway link on remaining portion of right

bank of Indus for connectivity upto Peshawar via

Kohat

6.00

vii) Rail link from Quetta – Bostan – Zhob to D.I. Khan for

provision of direct connectivity from Baluchistan to

NWFP.

6.00

viii) Upgradation of Mirpur Khas – Khokhrapar section

from meter gauge to broad gauge upto international

1.8

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boarder.

ix) Feasibility study for provision of rail link from

Rawalpindi to Muzaffarabad AJK

0.1

x) Feasibility Study for provision of rail link from Dina to

Mirpur AJK.

0.05

xi) Procurement/ manufacture and assembling of 100

locomotives (75 diesel and 25 electric).

16.0

xii) Procurement/ manufacturing and assembly of 1000

freight wagons.

4.8

xiii) Procurement/ manufacturing and assembly of 100

passenger coaches.

4.10

xiv) Electrification of Lahore – Khanewal double line

section with rehabilitation of existing single line

Lahore – Khanewal section (285 Kms). And extension

upto Samasatta (163 Kms).

5.60

xv) Provision of road over bridge at Chowrangi Chowk

Export Processing Zone Karachi. (50% of the cost is to

be borne by EPZ).

0.125

xvi) Improvement and rehabilitation of old and obsolete

signalling system on Karachi – Peshawar section in

15.00

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phases.

xvii) Other minor projects. 1.00

xviii) For completion of on going schemes. 23.00

Railways Ministry trying to improve train food

By Hassan Ali

LAHORE: Pakistan Railways has decided to contact owners of renowned

restaurants to serve food on major trains at subsidized rates and has sent a

proposal in this regard to the Prime Minister’s secretariat for approval, Daily

Times learnt on Friday. Pakistan Railways (PR) sources said that the ministry

of railways made this decision after receiving numerous complaints from

passengers about the unhygienic and substandard quality of food served on

trains.

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Daily Times also learnt that the federal minister for railways, Sheikh

Rashid Ahmed, has already contacted some well-known restaurants

and has asked them to submit proposals along with subsidized price lists of

food items. Pakistan Railways Advisory and Consultancy Services (PRACS) is

currently responsible for managing food services on almost all major trains.

Sources said Railways authorities are not satisfied and have warned PRACS

several times that if they do not improve the standard of food and service PR

would award the tender to restaurants or caterers. The ministry has now

proposed that PRACS will handle the catering but would get the foodstuff

from elsewhere.

PR also wants to get rid of the dinning car, infamous for its unhygienic

conditions and substandard food, and the authorities are said to be taking

steps towards this end, sources said. Railways general manager (GM)

operations told Daily Times that the ministry has submitted proposals for

serving better quality food not just on trains but also at major railway

stations.

Joint Director PRACS Mirza Masood said PRACS has been providing “best

foodstuff and services to the passengers”. He said he could not understand

why the ministry has submitted such proposals as PRACS is a subsidiary of

PR and has been operating according to the will of railways authorities.

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Saturday, June 30, 2007

Minutes of the meeting on RBMTS and NAMTA

A meeting was held at the Ministry of Railways (MOR) on 7.2.2007 to discuss

the proposed National Mass Transit Authority (NAMTA) and development of

Rail Based Mass Transit Systems (RBMTS) for major cities of the country. The

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meeting was chaired by Federal Minister for Railways’ besides

Secretary/Chairman Railways, representatives from all the four

provincial Governments, CDA, Ministries of Communications, Finance,

Planning & Development, Railways and City Nazims were present? (List of

participants enclosed).

.The Federal Minister for Railways introduced the participants to the

proposed National Mass Transit Authority. He stated that the Prime Minister

had approved the establishment of NAMTA and had also approved that

feasibility studies be initiated forthwith even before the establishment of

NAMTA.

The Secretary Railways emphasized at the outset that the objective of

NAMTA was to provide a forum for facilitating the provincial

governments/city governments in developing rail based mass transit system

for their cities and also to act as a Regulatory Authority for such systems.

The Federal Government had no intention of intruding into the sphere of

urban transport which was the jurisdiction of the Provinces. However, since

the development of such highly technical and costly systems involved

technical assistance as well as heavy ?financing facility from

donors/creditors, the Federal Government/Pakistan Railways was in a

suitable position to provide support in that respect. Moreover, as a watchdog

NAMTA will see that proper standards/specifications and technology are

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adopted not only to ensure safety but also that the projects are

sustainable

The Secretary Railways emphasized at the outset that the objective of

NAMTA was to provide a forum for facilitating the provincial

governments/city governments in developing rail based mass transit system

for their cities and also to act as a Regulatory Authority for such systems.

The Federal Government had no intention of intruding into the sphere of

urban transport which was the jurisdiction of the Provinces. However, since

the development of such highly technical and costly systems involved

technical assistance as well as heavy financing facility from donors/creditors,

the Federal Government/Pakistan Railways was in a suitable position to

provide support in that respect. Moreover, as a watchdog NAMTA will see

that proper standards/specifications and technology are adopted not only to

ensure safety but also that the projects are sustainable.

NAMTA will leave it to the discretion of Provincial/District Governments to

conduct feasibility studies, plan, execute, operate and maintains such

systems but where any Province/City requests it to be handled by NAMTA, it

will do so.? In order to save time it would be advisable for city/provincial

Governments to get feasibility studies initiated through NAMTA as has been

requested by the NWFP, Sind and Baluchistan Governments.

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A presentation was made by Mr. Imtiaz Ahmad, Secretary Railway

Board to highlight the urgent need of developing RBMTS for the eight

major cities and presented?? Various models of Metro/suburban rail transport

in Bangkok, Delhi, Singapore and Kualalampur based on BOT, Public-Private

Partnership and State ownership. It was pointed out that experience showed

that BOT projects were not very successful while the models of public private

partnership or partial State management were feasible options.

Copies of the proposed draft legislation which requires considerable

amendments for the establishment of NAMTA were also circulated among

the participants.

After the presentation, open discussion was made on the draft legislation

and the role of NAMTA. The meeting was informed that since the subject of

urban transport was listed neither in the Federal legislative list nor in the

concurrent list of the Constitution of 1973, whereas the subject of Railways

was listed in the Federal legislative list, the matter will be taken to the CCI

and its concurrence will be obtained before the proposed legislation was sent

to the Cabinet for approval and then to the Parliament for enactment. The

CCI is the appropriate forum where the Provinces can register their opinion.

However, before going to CCI, the bill will be redrafted in the light of

suggestion/views of all the stake holders.

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The participants were therefore, requested to send their comments on

the bill within two weeks and also confirm their willingness for

conducting of feasibility studies by the MOR/NAMTA for RBMTS for their

cities.

Nazim Peshawar stated that there was a lot of congestion in the city of

Peshawar and provision of Rail Based Mass Transit System is required for the

city. He desired that the feasibility study for the provision of Mass Transit

System for the city be carried out by NAMTA.

Nazim Quetta explained that due to rapid urbanization in the city the

vehicular traffic on the road had increased manifold during the recent years

and posing problems for the smooth movement of traffic. He added that a

meeting for the provision of Rail Based Mass Transit System was convened

by the P&D Department of Government of Baluchistan on 16th January at

Quetta.

Member Technical CDA stated that Expression of Interest for the provision of

Rail Based Mass Transit System in the twin cities of Rawalpindi-Islamabad

had already been invited. He further stated that besides Rawalpindi,

Islamabad also experienced traffic congestion. Hence there was need of

introducing Rail Based Mass Transit System. He stated that CDA will have no

objection if the project was taken over by NAMTA but Provincial Govt. may be

consulted.

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Chief Engineer, Traffic Engineering Bureau, Lahore desired that

standards for the construction of Rail Based Mass Transit System

should be laid down by NAMTA.

Consultant KCR/NAMTA explained that the specifications for the construction

of Rail system, safety parameters, etc, already exist in the codes and

manuals of Pakistan Railways and they will be amended/modified to meet

with any changes and requirements of Rail Based Mass Transit System.

Secretary Transport Punjab informed that Feasibility Study for the provision

of Rapid Mass Transit System in Lahore from Ferozepur Road (Hamza Town)

to Shahdara had already been completed, identifying an estimated cost of

US$ 2.5 Billion for the project.? Detail design is being carried out. He further

stated that since Government of Punjab has already undertaken the

provision of Rail Based Mass Transit System in Lahore, there was no need of

NAMTA to get involved in construction or feasibility study which should be

left to District/City/Provincial Government. NAMTA should only act as

umbrella/Regulator.? This view was acceded to so far as Punjab was

concerned. However, the Minister and Chairman Railways stated that

MOR/NAMTA will follow the road map set for itself by the Punjab Government.

Nevertheless it will still act as safety Regulator. Moreover, the Provincial

viewpoint will be considered in CCI.The Chair observed that the bill for the

establishment of NAMTA will be presented to CCI and at that forum of way

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provisions in the bill. It was explained that the bill was a proposed

draft and all stake holders should give their viewpoints which will be

accommodated. NAMTA had no interest in getting involved in issues

concerning the Provinces.

The Executive Director of IPDF (Infrastructure Projects Development Facility)

of the Ministry of Finance extended assistance of IPDF which was meant to

arrange finances for mega projects, besides funding feasibility studies and

transaction advice. However, before financing structural support should be in

place.

The following decisions were taken in the meeting:

01) The Provinces will furnish their comments / observations on the bill of

NAMTA with in 15 (fifteen) days.

02) The bill for NAMTA will be amended modified to accommodate the

comments of provinces and will be furnished to CCI for consideration and

approval.

03) NAMTA will conduct the feasibility studies funded by Federal Government

/donor agencies in the major cities of country on the advice and consent of

Provincial Government(s).

The meeting ended with vote of thanks to the chair.

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Last updated: 2007-04-25

PAKISTAN TIMES

ISLAMABAD: Pakistan Railways would engage private partnership to invest in

freight operations to extract more revenues and bring efficiency in freight

logistics, said caretaker Minister for Railways Mansoor Tariq. Taking to a

delegation of National Logistic Cell (NLC) and a Dubai based business group,

he said that NLC in joint collaboration with the Dubai based group has

offered Pakistan Railways to operate their own container coaches between

Karachi and Lahore in cargo operations.

The Minister urged the delegation to avail the Open Track Policy initiated by

Pakistan Railways where the private parties can operate their own rolling

stock while paying track access charges to Railways. He also pushed the

delegation for getting these container wagons manufactured at Pakistan

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Carriage Factory, Islamabad and Mughalpora Workshop, Lahore. This

would not only save the foreign exchange but also provide financial

gains to Railways which is already involved in manufacturing of such wagons

at international standards, the Minister said.

He said that introduction of private partnership into the freight logistics,

Pakistan Railways would be able to bring efficiency and promptness in such

business activities. As the economy has grown tremendously over the last

decade due to consistent and business friendly policies of the government,

there is dire need to expand this network of freight handling, he added.

He said that despite making holistic efforts by Pakistan Railways over the last

few years, it could manage to handle only four percent of the total freight

business activity. The scope is tremendous and opportunities for growth are

unlimited as Pakistan is becoming a business hub between Europe, Central

and Middle East in the coming years, he said. This volume of business can be

doubled in no time as there is great demand from the business community of

Pakistan to increase the no of fast cargo wagons from Karachi downwards,

he added.

The Minister said that a number of steps have recently been taken to

improve the performance of freight segment in Pakistan Railways. High

capacity express container trains have been introduced, which operates daily

between Karachi and Lahore.-SANA

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Posted on December 8, 2007 in Pak Affairs

Bullet train plan gets under way

ISLAMABAD, Feb 10: The bullet train plan of Pakistan Railways kicked off on

Saturday when a consortium of three countries was awarded contract to

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undertake feasibility study of the project, which would make Pakistan a

rail-friendly country.

By initiating the feasibility study, Pakistan has thus become the first country

in South Asia to take the initiative of bullet train which is very much a

pioneering train with a very high speed record.

Under the agreement signed in Islamabad, ‘MR Consult’ will complete the

feasibility study at a total cost of Rs23.97 million, and submit it to Pakistan

Railways in October this year. Politically, the month of October will be crucial

when preparations for general elections and the election of the president will

be on top gear.

The ‘MR Consult’ is composed of Austria GEO Consult; Typsa of Spain and

Myco and Survey (Pvt) Ltd of Pakistan.

Federal Minister for Railways Sheikh Rashid Ahmad, who was present at the

signing ceremony, said the bullet train would cover the distance between

Rawalpindi and Lahore in only 75 minutes.

The major elements of the feasibility study would be to work out the shortest

possible distance, fare regime and timeframe to recover the investment.

When the dream would become a reality, people would have a fair choice of

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traveling between Rawalpindi and Lahore section by train or by air but

this would depend on the fare.

The present distance of 288km between Rawalpindi and Lahore will be

further reduced with the realignment of the track by removing 55 curves

between Sohawa and Dina. But for the bullet train, it has been proposed to

lay double track to be covered on both sides with wall in city limits and

fences in unpopulated areas.

The bullet train could be thought of as the world’s first high speed train.

Services started in 1964 with speeds at 210km/h or 131mph, the fastest

trains went at the time, and many countries, including the United States still

have no trains running at this speed. At the time the concept of “high speed”

was not really established as it is now.

Indeed many say it was the success of the bullet train which led to Europe

taking interest in making trains go fast. Since then the trains have been

going faster and faster.

February 11, 2007

Some of the facts n figures

Companies from eight countries have expressed interest in laying a

bullet-train track from Lahore to Rawalpindi and 51 companies have

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shown interest in running private trains. (US, Sweden, France,

Spain, China, Belgium and Germany)

http://www.dailytimes.com.pk/default.asp?

page=2006%5C11%5C08%5Cstory_8-11-2006_pg13_3

As many as 300 coaches will be imported, he said, and 700 will be

manufactured in Pakistan. On his visit to Ukraine, he said that a

Ukraine railway team would visit Pakistan to launch joint ventures with

Pakistan Railways.

ISLAMABAD, Feb 10 - Under the agreement signed in Islamabad, ‘MR

Consult’ will complete the feasibility study at a total cost of Rs23.97

million, and submit it to Pakistan Railways in October this year.

Politically, the month of October will be crucial when preparations for

general elections and the election of the president will be on top gear.

The ‘MR Consult’ is composed of Austria GEO Consult; Typsa of Spain

and Myco and Survey (Pvt) Ltd of

Pakistan.http://www.dawn.com/2007/02/11/nat8.htm

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Data from Year Book

PLANT & EQUIPMENT  UNIT 2004-2005 2005-2006

Route - Kilometers Kms. 7,791 7,791

Track - Kilometers Kms 11,515 11,515

Locomotives No. 557 544

Coaching Vehicles No. 1,604 1,663

Other Coaching Vehicles No. 214 241

Freight Wagons  No. 21,556 20,809

Railway Stations No. 626 626

OPERATIONS  UNIT 2004-2005 2005-2006

Passenger, Mixed & other Coaching

Trains Run. No 82,576 86,077

Train Kilometers, Passenger Mixed Thousa 31,119 31,497

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and other Coaching. nd

Coaching Vehicle-kilometers Thousa

nd591,397 581,288

Freight Train Run No 18,243 16,244

Freight Train-KilometersThousa

nd6,640 6,567

Freight Wagon-Kilometres (Freight &

Mixed Trains)

Thousa

nd351,514 350,107

Other Coaching Freight Tonne-

Kilometres.

Thousa

nd518,156 585,781

Volume of Traffic  UNIT 2004-2005 2005-2006

Passengers CarriedThousa

nd78,179 81,428

Passengers kilometersThousa

nd24,237,796 25,621,228

Tonnes of  Freight CarriedThousa

nd6410 60,27

Tonne - Kilometers  Thousa 5,013,540 5,906,847

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nd

Tonne - Kilometers Freight &

Coaching Combined.

Thousa

nd5,531,697 591,688

Freight Wagons Loaded No 320,001 298,875

       

FUEL CONSUMPTION  UNIT 2004-2005 2005-2006 

Furnace Oil Tonnes 2,985 3,047

H.S.D. Oil Tonnes 154,650 145,309 

Electric Energy KWH 11,924,746 11,736,977

Coal Tonnes 105.88 43.650

    

EMPLOYMENT & WAGES  UNIT 2004-2005 2005-2006

Persons Employed  No 86,807 86,096

Cost Of EmployeesThousa

nd6,346,243 7,646,562

Pension PaymentThousa

nd2,944,843 3,113,637

FINANCIAL RESULTS  UNIT 2004-2005 2005-2006 

Gross Earnings Thousa 17,827,467 18,043,641

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nd

Total Ordinary Working ExpensesThousa

nd14,158,740 15,868,276

Operating Ratio Percent 79.42 87.93

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SOURCES

PRIMARY SOURCE:

SYED USMAN WAZIR <[email protected]>

Thu, Jan 10, 2008 at 8:12 AM

Reply-To: [email protected]

To: [email protected], [email protected], [email protected]

Reply | Reply to all | Forward | Print | Delete | Show original

Dear Syed,

Thanks for showing interest in Siemens International. With regards to your email and project requisite, I am emailing you some useful links from our web database. You may find them useful for your analysis. Please also bear in mind that Siemens may or may not agree with your findings. for further queries you can email or call our investors relation helpdesk.

Hopefuly the links would be helpful,

sincerely,

Madeira Albert

International Investor Relations,

Siemens AG

http://w1.siemens.com/press/pool/de/homepage/the_company_2008.pdf

http://www.siemens.com/annualreport

http://w1.siemens.com/pool/en/investor_relations/downloadcenter/fmd_2003_ts_1073823.pdf

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http://w1.siemens.com/pool/en/investor_relations/downloadcenter/icn_fmd_2004_1148289.pdf

http://w1.siemens.com/pool/en/investor_relations/downloadcenter/the_company_2008.pdf

Telephone SupportWe would also be happy to answer your questions via telephone.

International (English)+49 (69) 797 6660Germany (German):+49 (800) 225 53 36

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Central Office:+49 89 636-00Pressestelle:+49 89 636 33032 Investor Relations:+49 89 636 32474

 

© Siemens AG 2008

Mr. Farhan Saeed-AVP Siemens Pakistan-Lahore, Madeira Albert International Investor Relations, Siemens AG and Mr. Syed Humayaun Basharat-Electrical engg. Pakistan Railways

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INTERNET:o money.cnn.com/2007/12/26/news/international/bc.apfn.as.fin.japan.china.bullet.ap

o www.ibtimes.com/articles/20071226/report-china-mulls-japan- bullet - train .htm

o www.upi.com/NewsTrack/Business/2005/11/14/

siemens _gets_chinese_ bullet _ train _contract/1087/ o www.atimes.com/atimes/China/FE13Ad01.html

o ieeexplore.ieee.org/iel5/6/27450/01222045.pdf

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