Railways losses widen to Rs61.19bn as audit flags Rs11.25bn irregularities

An audit report has identified Rs11.25bn in irregularities at Pakistan Railways for 2024-25 and highlighted weaknesses in financial controls and procurement. The organisation posted a net loss of Rs61.19bn during the year. ISLAMABAD: The Auditor General of Pakistan has pointed to financial irregularities worth Rs11.25 billion in Pakistan Railways for 2024-25, underscoring what the audit report described as continuing weaknesses in financial management, procurement and internal controls at the state-owned enterprise. Pakistan Railways continued to rely on regular financial support from the federal government because of recurring operational losses and management problems. The audit called for changes in fare management, service quality and operating efficiency to strengthen revenue generation and move the organisation towards a sustainable footing. Major audit observations The report listed seven major cases of financial mismanagement across different activities. The biggest amount involved unrecovered railway dues of Rs9.95bn from government departments and private parties. Other observations included a tax refund of Rs20.03 million to a contractor that the audit termed unjustified, a loss of Rs419.91m from excess customs duty payments, non-levy of import surcharge and container charges, and execution of deposit works without prior receipt and recovery of funds, causing a loss of Rs522.47m. The audit also said Pakistan Railways kept private bank accounts for rent and land lease collections instead of depositing the money into the Pakistan Railways Revenue Account, involving Rs612.81m. It further highlighted non-recovery of passenger compensation claims of Rs162.30m from State Life Insurance and misuse of Rs92.07m allocated under the improvement fund. The Auditor General recommended tighter fare management, better service quality and improved revenue per passenger-kilometre to increase earnings. It also suggested shifting towards performance-based incentives instead of continued dependence on federal support. Calls for reforms and better controls The report urged full implementation of the State-Owned Enterprises Framework and International Financial Reporting Standards to improve transparency in financial reporting and address the issues behind qualified audit opinions. It also stressed stronger internal controls to prevent misappropriation, recover outstanding dues, and improve oversight of fuel consumption and railway land. The audit recommended overhauling procurement practices through independent oversight and strict adherence to public procurement rules after identifying multiple cases of misprocurement. Financial and operational management remained below optimum levels, citing repeated cases of unrecovered dues, theft of railway material, encroachment on railway land, excessive fuel use and procurement irregularities. Three Pakistan Railways subsidiaries — PRACS, Railcop and PRFTC — had been under dissolution since June 2025, but their financial accounts were not provided to auditors for examination. Losses and government support The financial statements showed Pakistan Railways posted a net loss of Rs61.19bn in 2024-25, up by Rs9.81bn from the previous year. Revenue and other income were recorded at Rs92.72bn, while the operating loss stood at Rs60bn, equal to an operating loss ratio of 65pc. As of June 30, 2025, the organisation reported total assets of Rs515.32bn, including current assets of Rs110.08bn and non-current assets of Rs405.24bn. Total liabilities were Rs111.12bn, made up of current liabilities of Rs29.28bn and non-current liabilities of Rs81.84bn. During the year, the federal government provided revenue grants of Rs64.03bn and capital investment of Rs34.79bn to support the railway system. Pakistan Railways, classified as a strategic and essential state-owned enterprise under the SOE Act 2023, prepares both appropriation and commercial accounts. The appropriation accounts for FY25 received an unqualified audit opinion, while the commercial accounts continued to draw a qualified opinion because of unresolved shortcomings in financial reporting. The audit report added that road transport still dominates Pakistan’s transport sector, carrying about 93pc of passenger traffic and up to 96pc of freight, leaving railways with only a limited share despite successive government attempts to revive the sector.