Money that should have been collected wasn't. Money that was collected went into the wrong accounts.
Pakistan Railways, a state enterprise long outpaced by road transport, recorded a net loss of Rs61.19 billion in the fiscal year ending June 2025 — a deterioration that auditors traced not only to structural market disadvantage but to Rs11.25 billion in financial irregularities ranging from uncollected debts to misappropriated funds. The Auditor General's findings reveal an institution sustained almost entirely by federal generosity, receiving nearly Rs99 billion in grants and capital investment while generating losses at a ratio of 65 percent. What emerges is a portrait familiar in the long history of public enterprise: an organization that has lost its market, retained its costs, and deferred the reckoning through borrowed time and public money.
- Losses deepened by nearly Rs10 billion in a single year, with Rs9.95 billion in unpaid dues from government departments and private parties forming the largest and most avoidable wound.
- Auditors uncovered a cascade of failures — rent collected and deposited into private accounts, customs duties overpaid by hundreds of millions, construction projects launched without secured funding, and three dissolved subsidiaries whose financial records were never produced.
- The federal government continued writing checks regardless, providing Rs98.82 billion in combined grants and capital investment to an enterprise that could not cover even its operating costs.
- Commercial accounts received only a qualified audit opinion, meaning auditors could not certify their accuracy — a signal that the numbers presented may not fully capture the depth of the problem.
- Auditors are pressing for structural reform: international reporting standards, independent procurement oversight, performance-based incentives, and a deliberate path away from indefinite subsidy dependence.
Pakistan Railways closed the 2024-25 fiscal year Rs61.19 billion in the red — nearly Rs10 billion worse than the year before. The Auditor General's examination of the enterprise's books found Rs11.25 billion in financial irregularities, cataloguing a pattern of mismanagement that went well beyond clerical error.
The single largest problem was unpaid dues: Rs9.95 billion owed by government departments and private parties that was simply never collected. Surrounding that central failure were smaller but telling ones — a contractor received an unjustified Rs20 million tax refund, customs duties were overpaid by Rs419.91 million, and Rs612.81 million in rent and land lease revenue was deposited into private bank accounts rather than the official revenue account. Construction projects were launched without secured funding, costing Rs522.47 million. An improvement fund was misused to the tune of Rs92.07 million. The audit identified seven major categories of mismanagement and noted that most had become chronic.
Despite all of this, Pakistan Railways kept running — because the federal government kept it running. Revenue grants of Rs64.03 billion and capital investment of Rs34.79 billion arrived during the year, even as the railways generated Rs92.72 billion in its own revenue. The operating loss still reached Rs60 billion, a 65 percent loss ratio that no amount of subsidy arithmetic could obscure. Three subsidiary companies dissolved since June 2025 never submitted their financial records to auditors, and the commercial accounts that were submitted earned only a qualified opinion — auditors could not certify them as accurate.
The Auditor General's recommendations amount to a structural reckoning: adopt international financial reporting standards, reform procurement through independent oversight, strengthen internal controls against theft and misappropriation, and move toward performance-based incentives rather than open-ended federal support. The broader context sharpens the urgency — road transport carries 93 percent of Pakistan's passenger traffic and 96 percent of its freight, leaving railways to compete in a market they have largely already lost, sustained by public funds that might otherwise serve other purposes.
Pakistan Railways lost Rs61.19 billion during the fiscal year ending June 2025, a deterioration of nearly Rs10 billion from the year before. The Auditor General's office, in its examination of the state enterprise's books, uncovered Rs11.25 billion in financial irregularities—a catalogue of mismanagement that spans unpaid debts, diverted revenues, customs overpayments, and funds that simply went missing.
The largest single problem was straightforward: Rs9.95 billion in railway dues that government departments and private parties owed to Pakistan Railways but never paid. Beyond that lay a tangle of smaller failures. A contractor received an unjustified tax refund of Rs20 million. The railways overpaid customs duties by Rs419.91 million. They collected Rs612.81 million in rent and land lease payments but deposited the money into private bank accounts instead of the official revenue account. They failed to recover Rs162.30 million in passenger compensation claims from State Life Insurance. They misused Rs92.07 million from an improvement fund. They executed construction projects without first securing the necessary funds, losing Rs522.47 million in the process.
These were not accounting errors or rounding mistakes. They were structural failures in how the organization managed money, collected what it was owed, and controlled what it spent. The audit report identified seven major categories of mismanagement and noted that the pattern had become chronic—recurring instances of non-recovery of dues, theft of railway material, encroachment on railway land, fuel consumption that exceeded reasonable levels, and procurement practices that violated public rules.
Yet Pakistan Railways continued to operate because the federal government kept writing checks. During 2024-25, the government provided Rs64.03 billion in revenue grants and an additional Rs34.79 billion in capital investment. The railways generated Rs92.72 billion in revenue from fares and other sources, but their operating loss reached Rs60 billion—a 65 percent loss ratio. The organization's balance sheet showed total assets of Rs515.32 billion against liabilities of Rs111.12 billion, but those numbers masked an enterprise that could not sustain itself.
Three subsidiary companies—PRACS, Railcop, and PRFTC—had been formally dissolved since June 2025, yet their financial records were never made available to auditors. The commercial accounts that Pakistan Railways submitted received a qualified audit opinion, meaning auditors could not certify them as accurate. The appropriation accounts, which track government spending, received an unqualified opinion, but that distinction offered little comfort.
The Auditor General recommended a comprehensive overhaul: strengthen internal controls to prevent theft and misappropriation, implement international financial reporting standards, reform procurement through independent oversight, improve fare management and service quality, and move toward performance-based incentives rather than endless subsidies. The report stressed that Pakistan Railways needed to optimize revenue per passenger-kilometer and place itself on a sustainable financial footing. Without such changes, the organization would remain dependent on federal support indefinitely.
Context matters here. Road transport dominates Pakistan's transport sector, carrying 93 percent of passenger traffic and 96 percent of freight. Railways operate in that shadow, their market share limited despite successive government attempts to revive the sector. The losses and irregularities are not merely accounting problems—they reflect an organization struggling to compete in a market it has largely lost, propped up by government money that could be spent elsewhere, managed by systems that cannot account for what they spend.
Citações Notáveis
The report called for reforms in fare management, service quality and operational efficiency to improve revenue generation and place the organisation on a sustainable financial footing.— Auditor General of Pakistan
Financial and operational management remained sub-optimal, citing recurring instances of non-recovery of dues, theft of railway material, encroachment on railway land, excessive fuel consumption and procurement irregularities.— Audit report findings
A Conversa do Hearth Outra perspectiva sobre a história
Rs11.25 billion in irregularities—that's a staggering number. What does that actually mean in practical terms?
It means money that should have been collected wasn't. Money that was collected went into the wrong accounts. Money was spent without authorization. The largest piece, Rs9.95 billion, is simply dues that government departments and private parties owe Pakistan Railways but have never paid. It's like running a business where your customers don't pay their bills and you keep extending credit.
But the railways generated Rs92.72 billion in revenue. Why is that not enough?
Because their operating costs are Rs152 billion. They're losing Rs60 billion a year just on operations. The revenue looks substantial until you see what it costs to run the system—fuel, wages, maintenance, everything. And then on top of that, you have the irregularities draining money that should have been recovered.
The government gave them Rs99 billion in grants and investment. That's enormous.
It is. And it's the only reason the railways still exist. But that's not a business model—that's life support. The Auditor General is essentially saying: you can't keep doing this. You need to either collect what you're owed, cut costs, raise fares, or improve service enough that people use the railways instead of buses. Right now, roads carry 93 percent of passenger traffic. Railways are a relic.
What about those three subsidiary companies that were dissolved but never audited?
That's a red flag. If you dissolve a company, you need to settle its accounts, recover its assets, pay its debts. If auditors can't even see the books, you don't know if money disappeared or was properly accounted for. It's another symptom of weak internal controls.
Can Pakistan Railways actually become sustainable?
The audit report says yes, but only with real structural change—not just better accounting, but better management of fares, service quality, and operational efficiency. The question is whether the government will actually enforce those changes or just keep subsidizing the system.