ISLAMABAD: Pakistan Railways suffered a massive net loss of over Rs61 billion during the fiscal year 2024-25, marking a sharp 19.11 percent increase (Rs9 billion) compared to the previous year, according to the latest report by the Auditor General of Pakistan (AGP).
The national state-owned enterprise continues to face critical financial sustainability challenges, driven by a widening gap between revenue earnings and current expenditures. The audit assessment highlighted an operating loss of Rs60 billion and an alarming operating loss ratio of 65 percent for FY 2024-25. Data spanning the last five fiscal years reveals a compounding financial crisis, where gross earnings stood at Rs92.7 billion in FY 2024-25 against a staggering total working expense of almost Rs153 billion. Over the 2020-21 to 2024-25 period, working expenses surged by 60 percent, while operational losses increased by 29 percent, underscoring the management’s failure to achieve a financial break-even point.
The scope of the audit covered 84 out of 160 formations of the Pakistan Railways, encompassing an audited expenditure of Rs105.6 billion and audited receipts of Rs84.25 billion. In total, audit observations amounting to Rs34.42 billion were raised against the Railways and its subsidiaries. This includes Rs24.6 billion in budgetary irregularities, such as Rs11.2 billion in weak financial management, Rs7.2 billion in project management lapses and Rs11.5 billion in non-budgetary irregularities concerning land, assets and inventory.
The AGP report detailed significant discrepancies in budget execution. In the comparative analysis of the Revenue Grant (Grant No 85), the APakistan Railways recorded an expenditure of Rs154,212.26 million against a final allocation of Rs157,839.40 million, resulting in a saving of Rs3,627.14 million (2.30pc). While the savings fall within the permissible 5 percent limit, the audit noted that the administration failed to utilise available funds despite significant outstanding interest liabilities on foreign loans. Furthermore, under Capital Grant No 133, the Railways utilised Rs30,585.30 million against a final grant of Rs34,799.00 million, leaving Rs4,213.70 million (12.11pc) unutilised due to weak budgetary controls.
The AGP criticised the management for failing to utilise these vital financial resources invested by the federal government for capital infrastructure development.
The organisation’s financial statement analysis raised major red flags regarding its liquidity and asset base. According to the comparative balance sheet provided in the report, Pakistan Railways’ total assets stood at Rs515,329.57 million in FY 2024-25. However, revenue reserves have remained completely stagnant at Rs26.05 billion for the second consecutive year, showing a total absence of retained earnings and indicating severe structural issues in long-term profitability. Simultaneously, short-term financial pressure intensified as current liabilities jumped by 46.41 percent, climbing to Rs29,280.69 million in FY 2024-25 compared to Rs19,999.31 million in FY 2023-24. This uneven rise has heavily exposed the enterprise to short-term liquidity risks and financing stress.
The AGP also noted a capital mismatch, with fixed assets growing at a rate (17.26pc) that outpaces current assets, leaving inadequate working capital efficiency. Additionally, an amount of Rs34.34 billion accrued on account of commutation, GPF, etc, during the year was noticeably left uncharged to the Profit & Loss Account. In a separate analysis of Railways’ subsidiary, the Pakistan Railways Estate Development Company (Redamco), the balance sheet showed a significant contraction. Redamco’s total assets shrank by 42.34 percent, decreasing from Rs308,396,322 in 2024 to Rs177,825,496 in 2025, which the audit warned severely threatens the entity’s long-term operational capacity and stability. Despite this asset reduction, Redamco recorded a net profit after tax of Rs70.677 million for FY 2024-25, up from Rs29.317 million in FY 2023-24, a 141.08 percent increase. However, the audit unmasked several serious legal and financial violations by Redamco, including unauthorised retention of Railways’ share of Rs68.598 million as a payable in Redamco’s balance sheet as of June 30, 2025, causing direct financial and interest earnings losses to the Pakistan Railways; a banned vehicle purchase, as in direct violation of the Finance Division’s austerity ban issued on September 4, 2024, the company paid an advance of Rs19.74 million to purchase vehicles; unapproved audits, as Redamco’s annual accounts for FY 2024-25 were audited by a private chartered firm without obtaining the required statutory concurrence from the AGP; and missing documents, as the audit office noted that requested audited financial accounts for other major subsidiaries, including PRACS, RAILCOP and PRFTC, were completely withheld from the audit team.
Concluding the assessment, the AGP stressed the immediate need for the Pakistan Railways to implement stringent internal controls, address weak budgetary governance, and devise a robust financial recovery plan. Without aggressive containment of operating costs and structured utilisation of capital development funds, the department’s reliance on federal subsidies, which amounted to Rs64.03 billion in federal grant-in-aid for the year, will continue to drain the national exchequer.
