Pakistan Railways faces 130pc surge in bogies’ import cost

Business Oct, 30 2024
Pakistan Railways faces 130pc surge in bogies’ import cost
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ISLAMABAD: Amid strong objections from ministries of Finance and Planning, Pakistan Railways is seeking 130 percent increase in procurement cost of around 1,050 bogies to Rs 71 billion mainly because of currency depreciation and change of specifications.

Pakistan Railway’s case for an increase in procurement cost for 820 freight wagons and 230 passenger coaches from Rs 31 billion in 2017 to Rs 70.97 billion now was presented to Central Development Working Party few days back but was deferred at last moment.

Once proposal is cleared on technical grounds by CDWP, Executive Committee of National Economic Council may consider its formal approval. About 292 freight wagons out of 820 and 78 passenger coaches out of 230 have already been procured as of June 30 through two separate Chinese contractors and remaining bogies will be delivered by June 30, 2026. PR attributed cost escalation to exchange rate increasing from Rs 104 in 2017 to Rs 285 to dollar and repeated cancellation of bidding results for various reasons, including project reassessment under upgradation of ML-1 (Karachi to Peshawar line) under China-Pakistan Economic Corridor.

Ministry of Finance has challenged exchange rate and demanded that cost estimates be based on Rs 278 per dollar. Contract for 820 freight wagons was finally awarded to Baotou Beifing Chuangye, China, on March 30, 2022, for $ 41.64 million while that of 230 passenger bogies was given to CRRC Tangshan Co, China, on October 29, 2021, for $ 148.89 million.

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