Analysis of Public Sector Organization
What is Public Sector Organization?
• Are Owned and controlled by the
government (or local government).
• Provide public s...
Types of Public Sector Organizations
02 Types
1. Public Utilities
2. Nationalized Industries
1. Public Utilities
• Organizations provide
household services such as
water, sewerage, electricity
gas and Public Health ...
Nationalized Industries
• This was partly to gain control
over the main parts of the
economy.
• It was also partly to cont...
PIA – Pakistan International Airline
• PIA is a national flag carrier and a
state-owned enterprise of the
Government of Pa...
Birth of an Airline, Birth of a Nation
• In June 1946, Mr. Muhammad Ali
Jinnah with his singular vision and
foresight he r...
Orient Airways takes to the Skies
• On October 23, 1946 named Orient
Airways Ltd. In Calcutta.
• got an operating license ...
A New National Flag Carrier for Pakistan
• The Government of Pakistan decided to form a
state-owned airline and invited Or...
PIA’s First International Service
• First scheduled international service was
inaugurated in the year 1955.
• From Pakista...
New Management, New Directions, New Planes
• Mirza Ahmed Isphahani was
the first chairman and he
appointed Mr. Zafar-ul-
A...
The Golden years of PIA
• The Golden years of PIA
under the visionary
leadership of Air Commodore
Nur Khan as the Managing...
Unbroken Records
• In 1962, The Boeing 720 B was
on its maiden flight when it
flew from Seattle – London to
Karachi by PIA...
In 1970’s:
• Financially successful
period of Air Commodore
Nur Khan.
• Pakistan Army used PIA’s
services to airlift the
s...
In 1980’s
• In Mid 1980s, PIA
established Emirates by
leasing two of its airplanes,
as well as providing
technical and
adm...
In 1990’s and 2000’s
• PIA introduced a new livery in
January 2004.
• European Union Ban:
– On March 05, 2007 the European...
Current Decade
• In February 2012 PIA ordered 05 more Boeing
777-300LR aircraft with delivery starting in
2015.
PIA from National Flag Carrier to…
• PIA is worthy ambassador for
Pakistan and its people.
• PIA performed well until the
...
…A-National Liability
• In 2000’s despite remaining
the largest operator on
Pakistan’s international and
domestic routes, ...
Financial Highlights (Rs. In billion)
Particulars 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
operati...
From 2008 to 2011, the airline incurred a phenomenal loss of over Rs.62
Billion – Twice the accumulated loss of its 55 yea...
Findings of PIA Crisis
• The Pakistan International
Airline is suffering from
severe financial crisis. It is in
fact passi...
PIA’s Fleet
• 39 aircrafts in its fleet.
• A number of aircrafts have been
grounded due to shortage of spare
parts or over...
Increase in Oil Price and
Devaluation of Local Currency
• Losses of more than
Rs.53 billion from 2006 to
2008 and also suf...
Over Staffing
• PIA had 18,231 employees
making 467 employees per
aircraft.
• No major air travel on the
planet has that t...
A big Question Mark “?”
• As per the typical ratio PIA needs to have
6630 employees to run the airline and with
200% overp...
Maintenance and Repair Problems
• It is stated that tender for the
maintenance of the aircrafts
has been given to a compan...
Flight Delays,
Emergency Crash Landings
and Cancellation
• Flight delays and cancellations
have become the norm rather
tha...
Bad Governance and
Poor Performance
• Sagging Seats and soggy seat covers, messy floor
carpets, dirty and gritty outlook, ...
Corruption
• Recently, Transparency International Pakistan
(TIP) dispatched a letter to the chief justice of
Pakistan to t...
Liabilities
• In a meeting of the Public
Accounts Committee
(PAC), the Managing Director
Mr. Nadeem Yousafzai said
that th...
White Elephant
• The White Elephant idiom
is renowned as “Something
that is expensive to keep
Up”.
• And now PIA – Pakista...
Public-Private Partnership –
Transition to Greater Economic Freedom
• A general premise of economic freedom rests
on the m...
Public-Private Partnership Policy
• The Government of Pakistan issued a
comprehensive policy document on PPP titled
Privat...
Public-Private Partnership –
Transition to Greater Economic Freedom
• As governments turn to the private sector
to provide...
PIA to Come Out of
Financial Crisis:
• Some suggestions and
recommendations on
consideration of how
PIA to come out of
fin...
Keep PIA Away from Ministry
– Need Quality Leadership
• Retrospectively head of PIA has full backing of the
Chief Executiv...
Privatize PIA, Now!
• A fiscally strapped government is unable to provide
financial help in executing a business plan to a...
Eradicate Corruption
• Despite the tremendous inadequacies
and corruption in the airline, it still has
74 % domestic and 4...
Restructuring the Human Resource
• For rationalization of worker, PIA intends
to transfer 4339 employees on
deputation to ...
Offering Packages to Increase
Number of Passengers
• The management has to
look on other measures
to increase passengers
l...
The Conclusion
• The conclusion from this is the fact
that PIA has already been bankrupt
and this is the time to begin tak...
Rail Transport in Pakistan
• Pakistan has celebrated
150 years of Railway so it
has a rich railway
heritage.
• It was in 1...
British Era - Karachi to Peshawar
(Main Line)
• Sir Henry Edward Frere was appointed as
the commissioner of Sindh in 1851,...
British Era - Karachi to Peshawar
(Main Line)
• The railway line from Peshawar to
Karachi closely follows
Alexander’s line...
Post Independence
• At the time of independence in
1947, 3,133 Km route of North
Western Railways were
transferred to Indi...
Operational Structure
• Ministry of Railway is responsible for overall control
of Pakistan Railways as well as to guide th...
Human Resources
• Pakistan Railway has about
90,000 employees consisting
of staff and officer as of
2008.
• 71% of the tot...
Running Out of Steam -
Pakistan Railways
• Railway sector in
Pakistan has lost its
position in transport
sector. The marke...
Financial Position
Particulars 2007-08 2008-09 2009-10 2010-11 2011-12 Q2 2012-13
Net Profit / Loss
(Rs. In billions)
15.9...
Findings of Pakistan
Railways Crisis
• Following are some
causes for the financial
crisis of the rail
transport service of...
Passenger Trains
• Annual Passenger volume
carried by PR in late 1970’s
was approximately 145
million, which has come
down...
Freight Units
• Freight business was of PR
was 15 million tons in late
1960’s but has come
down to about 50% i.e. 07
milli...
Natural calamities
• According to the National
Disaster Management
Authority, the heavy floods
have caused a loss of Rs.6....
Law and Order Situation of Pakistan
• The railway coaches
were also the targets of
mobs and arson attacks
after Benazir Bh...
Shortage of Locomotives
• Out of 522 total locomotives only
220 are in working order, out of
which 100 are in poor conditi...
Bunged Supply of Fuel
• This problem began from
January 2011 when a
Pakistan Railway was unable
to pay Rs.700 million to P...
Poor and Insufficient Management
• I am confused to see that if we want to
obtain urgent ticket reservation, we will
not g...
Corruption, Nepotism -
The other problems in PR
• A government
spokesman said that
the Federal Minister
Cabinet approved
R...
PR’s Liabilities
• The annual losses resulted
in a PR debt of Rs.340
billion.
• The national bank for which
it has been pa...
PPP – Public Private Partnership
Trains Revenue Per Day Revenue Per Annum
Shalimar Express Rs. 2.8 Million Rs. 1.022 Billi...
White Elephant
• Despite having world’s best
railway track flowing across
the country like the course
of rivers, Pakistan ...
Pakistan Railways:
A Completely Mismanaged Sector
in Need of Fresh Approach
• Following are some
suggestions to improve
th...
Eradicate Corruption
• First of all government
should eradicate
corruption in railway
sector from top to
bottom.
• Corrupt...
Privatize Pakistan Railway
• Pakistan Railways should be privatized
completely.
• This is also the possible solution of th...
Modernize the Inter-City Rail System
• The need is to modernize the inter city and
intra city rail system in terms of both...
Overcoming Fuel Deficiency
• Pakistan is blessed with Coal reserves and a single Thar
Coal reserve of Sindh is about 850 T...
Public Private Partnership with China
• It is time to make Public Private Partnership
with some foreign association like C...
Public Private Partnership with China
• Take decision to make lease agreement with
China so that they will put investment ...
The Conclusion
• Pakistan Railways is going towards
bankruptcy due:
– to heavy liabilities
– corruption in different depar...
OGDCL –
Oil and Gas Development Company Ltd.
• OGDCL is a Public
Limited Company
engaged in exploration
and development of...
Prior to OGDCL
• Prior to OGDCL's emergence, exploration
activities in the country were carried out by
Pakistan Petroleum ...
Establishment of OGDCL
• Government of Pakistan signed a long-term
loan Agreement on 04 March 1961 with the
USSR, whereby ...
Initial Successes
• A number of donor agencies such as the
World Bank, Canadian International
Development Agency (CIDA) an...
Transition to a self financing entity
• Due to major oil and gas discoveries in the
eighties, the Government in July 1989,...
Conversion into
Public Limited Company
• Prior to 23 October
1997, OGDCL was a statutory
Corporation, and was known as
OGD...
Initial Public Offering
• Government of Pakistan disinvested part
of its shareholding in the company in
2003.
• Initially ...
Fueling the Future
• The Company on September
20, 2011 celebrated its
Golden Jubilee.
• The Company during the past
five d...
Financial Over view
Particulars
2001-
02
2002-
03
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
2009-
10
2010-
11
...
OGDCL’s Fields
• OGDCL due to its major
activities exploration
and development of Oil
fields have 283 wells
drilled up to
...
Major Fields
Sindh Punjab Balochistan KPK
Tando Alam (Oil) Fim Kassar (Oil) Loti (Gas) Chanda (Oil)
Lashari (Oil) Missan K...
Financial Highlights of FY2011-12
• Sales Revenue increased by 2.71% to
Rs.197.8 billion from Rs. 155.6 billion
• Profit b...
Excellence Awards
• KSE Top Twenty Five
Companies Awards for
the sixth consecutive
years.
• Best Corporate Report
Award fo...
The Conclusion
• All of the achievements are because of the
visionary management and right decision
making which is making...
The Conclusion
In Organizations like White Elephants! i.e. PIA , Pakistan Railways
“Perhaps people felt there was nothing ...
Winston Churchill Quoted:
“Success is walking from
failure to failure with no
loss of enthusiasm.”
Analysis of public organizations in pakistan
Analysis of public organizations in pakistan
Analysis of public organizations in pakistan
Analysis of public organizations in pakistan
Analysis of public organizations in pakistan
Analysis of public organizations in pakistan
Analysis of public organizations in pakistan
Analysis of public organizations in pakistan
Analysis of public organizations in pakistan
Analysis of public organizations in pakistan
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Analysis of public organizations in pakistan

  1. 1. Analysis of Public Sector Organization
  2. 2. What is Public Sector Organization? • Are Owned and controlled by the government (or local government). • Provide public services, ‘public goods’ which cause problems for the private sector, and so they are often better provided by the public sector.
  3. 3. Types of Public Sector Organizations 02 Types 1. Public Utilities 2. Nationalized Industries
  4. 4. 1. Public Utilities • Organizations provide household services such as water, sewerage, electricity gas and Public Health System - Hospitals.
  5. 5. Nationalized Industries • This was partly to gain control over the main parts of the economy. • It was also partly to control monopolies which could act against the public interest, especially by charging high prices to consumers. • These industries became more and more inefficient until they needed government subsidies to stay in business.
  6. 6. PIA – Pakistan International Airline • PIA is a national flag carrier and a state-owned enterprise of the Government of Pakistan. • Owned by the Government of Pakistan (90.22%) and Shareholders (9.8%). • Regulated by the Ministry of Defense • It employed 18,043 people as of May 2012. • Headquartered at Jinnah International Airport Karachi. • have 23 domestic and 36 international destinations in 25 countries across Asia, Europe, North America, Middle East and Far East.
  7. 7. Birth of an Airline, Birth of a Nation • In June 1946, Mr. Muhammad Ali Jinnah with his singular vision and foresight he realized that with formation of two wings of Pakistan separated by thousands of miles a swift and efficient mode of transport was imperative. • He instructed Mr. Mirza Ahmed Isphahani, a leading industrialist to setup national Airline on priority basis.
  8. 8. Orient Airways takes to the Skies • On October 23, 1946 named Orient Airways Ltd. In Calcutta. • got an operating license in May 1947. • Four Douglas DC – 3s were purchased. • Within two months of Orient Airways Pakistan was born. • The initial routes were: Karachi – Lahore – Peshawar, Karachi – Quetta – Lahore and Karachi – Delhi – Calcutta – Dacca. • By the end of 1949, Orient Airways had acquired 13 Airplanes.
  9. 9. A New National Flag Carrier for Pakistan • The Government of Pakistan decided to form a state-owned airline and invited Orient Airways to merge with it. • The out of the merger was the birth of a new airline through PIAC (Pakistan International Airline Corporation) Ordinance 1955 on January 10, 1955.
  10. 10. PIA’s First International Service • First scheduled international service was inaugurated in the year 1955. • From Pakistan to London Heathrow Airport via Cairo and Rome.
  11. 11. New Management, New Directions, New Planes • Mirza Ahmed Isphahani was the first chairman and he appointed Mr. Zafar-ul- Ahsan as Managing Director of PIA first time from 1956 to 1959. • Mr. Zafar-ul-Ahsan - MD was to house all the major departments of the airline at PIA Head Office building at Karachi Airport.
  12. 12. The Golden years of PIA • The Golden years of PIA under the visionary leadership of Air Commodore Nur Khan as the Managing Director appointed by the Government of Pakistan in 1959. • Every Fifth PIA Passenger a New One.
  13. 13. Unbroken Records • In 1962, The Boeing 720 B was on its maiden flight when it flew from Seattle – London to Karachi by PIA’s Senior Captain Abdullah Baig. • PIA completed the flight in 06 hours, 43 minutes and 50 seconds. A record which remains unbroken to this day.
  14. 14. In 1970’s: • Financially successful period of Air Commodore Nur Khan. • Pakistan Army used PIA’s services to airlift the soldiers and ammunition to East Pakistan. • In 1974 PIA launched Pakistan International Cargo offering air freight and cargo services.
  15. 15. In 1980’s • In Mid 1980s, PIA established Emirates by leasing two of its airplanes, as well as providing technical and administrative assistance to the new carrier • In 1989, Maliha Sami was the first female pilot of PIA.
  16. 16. In 1990’s and 2000’s • PIA introduced a new livery in January 2004. • European Union Ban: – On March 05, 2007 the European Commission banned all 34 planes of PIA’s 42- planes fleet from flying to Europe cities safety concerns of its aging fleet. – The ban was completely removed on November 29, 2007 by EU Commission and PIA’s entire fleet was permitted to fly to Europe.
  17. 17. Current Decade • In February 2012 PIA ordered 05 more Boeing 777-300LR aircraft with delivery starting in 2015.
  18. 18. PIA from National Flag Carrier to… • PIA is worthy ambassador for Pakistan and its people. • PIA performed well until the 1970’s. • Its services and personnel have helped to make the country more widely known and her people better understood in a large part of the world.
  19. 19. …A-National Liability • In 2000’s despite remaining the largest operator on Pakistan’s international and domestic routes, the carrier is increasingly losing its share in the global market due to the management's constant negligence and massive corruption executed under the banner of aircraft replacement.
  20. 20. Financial Highlights (Rs. In billion) Particulars 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 operating Revenue 39.23 43.61 43.67 47.95 57.79 64.07 70.59 70.48 88.86 94.56 107.53 116.55 82.03 Operating Expenses 42.03 43.24 38.10 42.57 55.87 67.08 79.15 76.42 120.50 98.63 106.81 134.48 104.25 Net Profit or Loss before tax (2.80) (0.366) 5.58 5.377 1.92 (3.11) (8.58) (5.94) (31.64) (4.06) 0.72 (17.93) (22.22) Net Profit / Loss after Tax (5.16) (2.20) 1.87 1.30 2.31 (4.41) (12.76) (13.40) (36.14) (5.82) (20.79) (26.77) (22.43) Total Loss Accumulated (144.4)
  21. 21. From 2008 to 2011, the airline incurred a phenomenal loss of over Rs.62 Billion – Twice the accumulated loss of its 55 years history! Which brought PIA – Pakistan International Airline from a national flag carrier to a national liability. 1.87 1.3 2.31 -5.16 -2.2 -4.41 -13.4 -36.14 -5.82 -20.79 -26.77 -22.43 -40 -35 -30 -25 -20 -15 -10 -5 0 5 2000 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Profit/LossRs.Billions(AfterTax) Years Years of PIA's Profit / Loss Profit in Billions Loss in billions Accumulated loss on 30.09.12 is Rs.144.40 Billion.
  22. 22. Findings of PIA Crisis • The Pakistan International Airline is suffering from severe financial crisis. It is in fact passing through a critical phase. The major reasons are:
  23. 23. PIA’s Fleet • 39 aircrafts in its fleet. • A number of aircrafts have been grounded due to shortage of spare parts or overhauling. • Recently Captain Nadeem Yousafzai – MD of PIA said that the airline’s five year revival plan for 2010-14 is pending with the finance ministry which would not possible without adding 16-new aero planes to its fleet.
  24. 24. Increase in Oil Price and Devaluation of Local Currency • Losses of more than Rs.53 billion from 2006 to 2008 and also suffered huge losses in 2009 and 2010 particularly due to the increase in the price of fuel and devaluation of Pakistani Rupee.
  25. 25. Over Staffing • PIA had 18,231 employees making 467 employees per aircraft. • No major air travel on the planet has that type of ratio. • The typical ratio of the profession is 170 employees per air craft and finest are 70 employees per air craft.
  26. 26. A big Question Mark “?” • As per the typical ratio PIA needs to have 6630 employees to run the airline and with 200% overpopulated human energy why our air travel not succeeding? • Why 1000’s of contractual employees happen to regularized at any given time when air carriers all over the world practicing downsizing to chop their cost by reducing the workers per aircraft ratio? • The number of people hired by the incumbent government is highest in the history of the national flag carrier with 1,179 employed in 2010 alone. Do you know the criteria of employing these folks? The answer is easy and noisy, the selection criteria is driven by Political Motives, right from top to bottom.
  27. 27. Maintenance and Repair Problems • It is stated that tender for the maintenance of the aircrafts has been given to a company that does not have international reputation. • The obscure vendors, hired by PIA are one of the major problems. They are just like risky shots in cricket. The airline that once assisted other airlines is now losing its control over itself.
  28. 28. Flight Delays, Emergency Crash Landings and Cancellation • Flight delays and cancellations have become the norm rather than the exception. • Naturally this situation can not be tolerated for unlimited period. • Several untoward incidents occurred in PIA in the last decade. The passengers should not suffer in its custody.
  29. 29. Bad Governance and Poor Performance • Sagging Seats and soggy seat covers, messy floor carpets, dirty and gritty outlook, malfunctioning toilets doors, rattling planes and failing equipments are causes of delayed flight. • It is pertinent to mention that one of PIA air craft was inspected at Paris Airport by the inspectors of safety Assessment of Foreign Aircraft (SAFA) while in route from Paris to Lahore. They detected several snags in the aircraft. The organization warned PIA to overpower the shortcomings or face the consequences. The team detected fuel leakage from one of the engines of Airbus A-310. In consequences passengers were evacuated in emergency. There is a long list of snags showing the “real efficiency” of the PIA administration. • Despite the crippling losses, PIA’s employees – both retired and serving still enjoyed free travel in Pakistan as well as abroad. Former director and other board members are entitled to 12 tickets in economy and business class including other facilities.
  30. 30. Corruption • Recently, Transparency International Pakistan (TIP) dispatched a letter to the chief justice of Pakistan to take suo moto notice against PIA for deliberate default in repair payments for 12- now grounded airplanes and fabricating excuses to purchase 39-new airplanes at the estimated cost of Rs.239.76 billion. • In Saga deal in February 2012. PTI’s information secretary Shafqat Mahmood disclosed that PIA signed an agreement to purchase 05 Boeing 777 for Rs.143.85 Billion. The process according to Shafqat Mahmood was rightfully questioned by Transparency International which believed that Rs. 4.7 billion kickbacks were taken in the deal i.e. almost 1/3 of the total amount. These types of huge on-going and past experiences of corruption made PIA almost bankrupt as stated once by Capt. Ijaz Haroon in 2008.
  31. 31. Liabilities • In a meeting of the Public Accounts Committee (PAC), the Managing Director Mr. Nadeem Yousafzai said that the one of the causes of the failure of PIA is the restructuring of debt stock of Rs.140 billion and it would depend on 21% depreciation of the rupee against the US Dollar in the next four years and it will increase if currency devaluation increases.
  32. 32. White Elephant • The White Elephant idiom is renowned as “Something that is expensive to keep Up”. • And now PIA – Pakistan International Airline is just a “White Elephant” as unfortunately it is one of 08 airline companies across the globe functioning with costs higher than returns which is once a remarkable airline in the world.
  33. 33. Public-Private Partnership – Transition to Greater Economic Freedom • A general premise of economic freedom rests on the minimum role of the government in service provisioning. • However there are services, or economic limitations of some recipients of these services, which make it difficult for the government to completely roll back from direct provisioning. • This situation also arises where the private sector sees little economic incentives or experiences insurmountable regulatory restrictions. To counter these problems, a combination of public and private sector is used, commonly known as Public-Private Partnership (PPP).
  34. 34. Public-Private Partnership Policy • The Government of Pakistan issued a comprehensive policy document on PPP titled Private Participation in Providing More and Better Public Services through Improved Infrastructure in 2007. • This document states that “many economically and socially worth projects lack the ability to raise the requisite revenues to ensure adequate returns for the investor risk.” • The national policy document also mentions following priority areas for PPP contracts: – Transport and logistics. – Mass urban public transport. – Municipal services (water supply and sanitation, low-cost housing and education and health facilities). – Small scale energy projects. 43% 19% 9% 29% PPP Investment : Pak Rupees 30 Billion (2008) Trasport and Logistics Office / Industry Muniscipal Services Mass Urban Public Transport
  35. 35. Public-Private Partnership – Transition to Greater Economic Freedom • As governments turn to the private sector to provide services once delivered by the public sector, they must learn new skills. An increasingly common way is public- private partnerships units. Making the right choices on what roles such units play, where they are located, and how conflicts of interest are managed is critical in their success. • Public-Private Partnership represents a transition from an omnipresent government to a completely free private sector. • It appears that if roles are properly defined, this may well lead to an efficient service provisioning based on the principle of financial viability, rational price structure and user-friendliness.
  36. 36. PIA to Come Out of Financial Crisis: • Some suggestions and recommendations on consideration of how PIA to come out of financial crises.
  37. 37. Keep PIA Away from Ministry – Need Quality Leadership • Retrospectively head of PIA has full backing of the Chief Executive of the country. He stands a chance to bring about an improvement otherwise the person is at the mercy of the line ministry. • Appointing Secretary Defense or Minister of Defense as Chairman PIA places the organization into the firm grip of ministry itself. • Efforts aimed at moving PIA away from Ministry of Defense to communication have been consistently resisted by those in uniform as the organization provides a lucrative job, Pre or post retirement. • As in the golden period of Air Commodore Nur Khan who enjoyed freedom to making appointments, postings and taking commercial decisions.
  38. 38. Privatize PIA, Now! • A fiscally strapped government is unable to provide financial help in executing a business plan to augment the fleet. • The solution lies in restructuring the airline on commercial principles. • Successful privatization of banking is touted as remedy. • Though PIA’s situation is somewhat different as Pakistani talent pool in international finance was strong. • We need to take a decision across the political divide to privatize PIA. Once the decision is taken, an aviation expert can be made its Chairman. • At present, the airline lacks the management and marketing skills to compete however PIA’s engineering and operational cadre is still quite strong. • So privatization is a corrective measure to turnaround the national flag carrier to the skies once again. • And it will save injection of billions of rupees to the airline in every bailout package yearly.
  39. 39. Eradicate Corruption • Despite the tremendous inadequacies and corruption in the airline, it still has 74 % domestic and 40% international market share which shows that if corrective measures are taken in time, the airline can succeed in achieving an even greater share of the market. • Eradicate corruption and its turnaround strategy will be an end to government and political forces interference in PIA. • This will greatly aid in removing poison from PIA otherwise the company’s revenue always used to fill the bellies of corrupt politicians.
  40. 40. Restructuring the Human Resource • For rationalization of worker, PIA intends to transfer 4339 employees on deputation to other allied departments which would ensure Rs.3.8 billion savings in five years. • Every year PIA should remove staff to try half the current number of staff and cut down on salaries. • The Chairman should think about telling new start up airlines in the Middle East to recruit exclusively from PIA and PIA should not replace those leavings to reduce administrative expenses.
  41. 41. Offering Packages to Increase Number of Passengers • The management has to look on other measures to increase passengers like tie in with festivals and tourism events in Pakistan and should work on price and numbers of flying as well as in Hajj and Umrah Packages.
  42. 42. The Conclusion • The conclusion from this is the fact that PIA has already been bankrupt and this is the time to begin taking actions rather sit idle and awaiting miracles. • PIA is within extreme economic crisis and it takes some hard choices and actions to drag itself into business. • PIA is struggling with an emergency due to poor management, nepotism, corruption and insufficient technology. • Some serious, quality leadership and firm making decisions are required to save PIA from complete destruction.
  43. 43. Rail Transport in Pakistan • Pakistan has celebrated 150 years of Railway so it has a rich railway heritage. • It was in 1861 when it came into existence in the form of railway built from Karachi to kotri.
  44. 44. British Era - Karachi to Peshawar (Main Line) • Sir Henry Edward Frere was appointed as the commissioner of Sindh in 1851, He also initiated the survey for a Railway Line in 1858. • The Sindh Railway was formed in 1855 and on May 13, 1861 succeeded in connecting Karachi to Kotri. This was first railway line for public traffic between Karachi City and Kotri, a distance of 108 miles (174 Km). • The 04 sections i.e. Sindh Railways, Indus Flotilla Company, Punjab Railway and Delhi Railways working in a single company purchased by the secretary of State for India in 1885 and named North Western State Railways in 1886.
  45. 45. British Era - Karachi to Peshawar (Main Line) • The railway line from Peshawar to Karachi closely follows Alexander’s line of March through the Hindu Kush Mountains to the Arabian Sea. • 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.
  46. 46. Post Independence • At the time of independence in 1947, 3,133 Km route of North Western Railways were transferred to India leaving 8,124 Km route to Pakistan. • In 1954, the railways lines was extended to Mardan and Charsada. In 1961 the North Western Railway renamed Pakistan Railways and in 1969 The KotAdu – Kashmore line was constructed.
  47. 47. Operational Structure • Ministry of Railway is responsible for overall control of Pakistan Railways as well as to guide the overall policy. • There are four Directorates in Pakistan Railway namely; – Administrative Directorate. – Technical Directorate. – Planning Directorate. – Finance Directorate. • Pakistan Railways has business directions as; – Infrastructure Business Unit. – Passenger Business Unit. – Freight Business Unit. – Manufacturing and Services Unit that look after. – Concrete Sleeper Factories. – Carriage Factory. – Locomotive Factory Risalpur. – Medical and Health Services. – Railway Construction Company.
  48. 48. Human Resources • Pakistan Railway has about 90,000 employees consisting of staff and officer as of 2008. • 71% of the total employees are working in Civil, Mechanical and Transportation departments. The remaining 29% were working in administration.
  49. 49. Running Out of Steam - Pakistan Railways • Railway sector in Pakistan has lost its position in transport sector. The market share of Pakistan Railway kept on declining with the passage of time.
  50. 50. Financial Position Particulars 2007-08 2008-09 2009-10 2010-11 2011-12 Q2 2012-13 Net Profit / Loss (Rs. In billions) 15.9 20.2 23.06 28.45 13.0 13.30 -30 -25 -20 -15 -10 -5 0 2007-08 2008-09 2009-10 2010-11 2011-12 Q2 2012-13-15.9 -20.2 -23.06 -28.45 -13 -13.3 NetProfit/Lossafterdeductions Years Years of PR's Profit / Loss Profit in billions Loss in billions Financial performance of Pakistan Railways from the past 06 years 2007 to 2012 The accumulated loss for the last Six Years is of Rs.114.45 Billion.
  51. 51. Findings of Pakistan Railways Crisis • Following are some causes for the financial crisis of the rail transport service of Pakistan.
  52. 52. Passenger Trains • Annual Passenger volume carried by PR in late 1970’s was approximately 145 million, which has come down to 59 million in 1992 / 1993. Means it lost about 60%. The total revenue during 1999-2000 amounted to Rs.4.8 Billion.
  53. 53. Freight Units • Freight business was of PR was 15 million tons in late 1960’s but has come down to about 50% i.e. 07 million tons, it is moving only 11% of total petroleum products and 2% of the total containers which reduced the revenue of the freight business unit.
  54. 54. Natural calamities • According to the National Disaster Management Authority, the heavy floods have caused a loss of Rs.6.7 billion to the railway network as several hundred kilometers of lines were washed away.
  55. 55. Law and Order Situation of Pakistan • The railway coaches were also the targets of mobs and arson attacks after Benazir Bhutto’s assassination resulting in huge losses.
  56. 56. Shortage of Locomotives • Out of 522 total locomotives only 220 are in working order, out of which 100 are in poor condition in 2010. • currently only 58 locomotives are in working conditions and needs consistent repair and maintenance. • out of 90,000 employees 01 locomotive has a burden of 1,516 employees other than the operational cost. • This is a major cause of the crisis of Pakistan Railway in revenue generation.
  57. 57. Bunged Supply of Fuel • This problem began from January 2011 when a Pakistan Railway was unable to pay Rs.700 million to PSO and in consequences PSO stopped the supply of fuel to Pakistan Railway. • According to a senior officer at Railways Headquarter 30 freight trains had to be stationed in yards.
  58. 58. Poor and Insufficient Management • I am confused to see that if we want to obtain urgent ticket reservation, we will not get the empty space in any train and even on major holidays on Eid’s and Independence day we can travel only if we have advance ticket at least fifteen days or more. • Innocent and poor people had to wait for many hours and I haven’t seen any train to come at time in my 22 years life. Also these delays and failure of engines are the consistent news on channels these days.
  59. 59. Corruption, Nepotism - The other problems in PR • A government spokesman said that the Federal Minister Cabinet approved Rs.10.1 billion in August 2011 for PR to upgrade equipment but only Rs.1 billion has utilized in PR’s concern.
  60. 60. PR’s Liabilities • The annual losses resulted in a PR debt of Rs.340 billion. • The national bank for which it has been paying Rs.4.6 billion in interest annually while at the same time the revenue has declined for the past three years.
  61. 61. PPP – Public Private Partnership Trains Revenue Per Day Revenue Per Annum Shalimar Express Rs. 2.8 Million Rs. 1.022 Billion Business Train Rs. 3 Million Rs.1.095 Billion Hazara Express Rs. 2 Million Rs. 730 Million Fareed Express Rs. 1.1 Million Rs. 401.5 Million •Till now year 2012, PR has privatized 04 of its trains i.e. Shalimar Express and Business Train, Hazara Express and Fareed Express for making revenue on following terms. •But due to lack of poor management and corruption PR facing troubles in generating the desired revenue as millions of amount is pending as Cash Receivables is one of the causes of crisis of Railway due to noted commissions of the high ups of PR with the firms.
  62. 62. White Elephant • Despite having world’s best railway track flowing across the country like the course of rivers, Pakistan Railway proved is just like a “White Elephant” as its slope is on a ramp in declining phase since 90’s.
  63. 63. Pakistan Railways: A Completely Mismanaged Sector in Need of Fresh Approach • Following are some suggestions to improve the condition of railway system of Pakistan.
  64. 64. Eradicate Corruption • First of all government should eradicate corruption in railway sector from top to bottom. • Corruption is the menace that is destroying it.
  65. 65. Privatize Pakistan Railway • Pakistan Railways should be privatized completely. • This is also the possible solution of the problem because currently the government of Pakistan has to bear huge losses and it also add some benefits including better service quality, expansion of railways as the government has empty pockets to invest in Pakistan Railways.
  66. 66. Modernize the Inter-City Rail System • The need is to modernize the inter city and intra city rail system in terms of both the quality of services on offer as well as the new equipment being used. But it looks like a dream of a mad man in Pakistan or a system in art gallery.
  67. 67. Overcoming Fuel Deficiency • Pakistan is blessed with Coal reserves and a single Thar Coal reserve of Sindh is about 850 Trillion Cubic Feet which is more than Oil reserves of KSA and Iran put together i.e. 375 billion barrels. • Chinese and other companies had not only carried out surveys and feasibility of this project but also offered 100% investment in last 07 to 08 years but the petroleum gang always discouraged it. If these reserves are exploited properly then the deficiency of fuel can be catered for the railway.
  68. 68. Public Private Partnership with China • It is time to make Public Private Partnership with some foreign association like China because the privatization with Pakistani firms results the same. • The delay in submission of dues and lack of investment on rail routes.
  69. 69. Public Private Partnership with China • Take decision to make lease agreement with China so that they will put investment on its routes, introduce new and high speed fleet of locomotives along with the land acquired by the Pakistan Railway to develop the vegetable production on its land space besides the rail track of 8,124 Km long to generate revenue for the country itself and making conditions to own system with equipments after the tenure by Pakistan.
  70. 70. The Conclusion • Pakistan Railways is going towards bankruptcy due: – to heavy liabilities – corruption in different departments of the railways – shortage of locomotives and lack of facilities for passengers. – poor management • In a nutshell, the time when lip-service was paid to the development of rail transport in this country is over, this is the definite time to take pragmatic steps to revitalize the Pakistan Railways. Corruption in Pakistan Railway can only be removed by its complete privatization.
  71. 71. OGDCL – Oil and Gas Development Company Ltd. • OGDCL is a Public Limited Company engaged in exploration and development of Oil and Gas resources.
  72. 72. Prior to OGDCL • Prior to OGDCL's emergence, exploration activities in the country were carried out by Pakistan Petroleum Ltd. (PPL) and Pakistan Oilfields Ltd. (POL). • In 1952, PPL discovered a giant gas field at Sui in Balochistan. • This discovery generated immense interest in exploration and five major foreign oil companies entered into concession agreements with the Government. • During the 1950s, these companies carried out extensive geological and geophysical surveys and drilled 47 exploratory wells.
  73. 73. Establishment of OGDCL • Government of Pakistan signed a long-term loan Agreement on 04 March 1961 with the USSR, whereby Pakistan received 27 million Rubles to finance equipment and services of Soviet experts for exploration. • Pursuant to the Agreement OGDC was created under an Ordinance dated 20th September 1961. • The Corporation was charged with responsibility to undertake a well thought out and systematic exploratory program and to plan and promote Pakistan's oil and gas prospects. • The first 10 to 15 years were devoted to development of manpower and building of infrastructure to undertake much larger exploration programs.
  74. 74. Initial Successes • A number of donor agencies such as the World Bank, Canadian International Development Agency (CIDA) and the Asian Development Bank provided the impetus through assistance for major development projects in the form of loans and grants. • OGDC's concerted efforts were very successful as they resulted in a number of major oil and gas discoveries between 1968 and 1982. • Toot oil field was discovered in 1968 which paved the way for further exploratory work in the North. • During the period 1970-75, the Company reformed the strategy for updating its equipment base and undertook a very aggressive work program.
  75. 75. Transition to a self financing entity • Due to major oil and gas discoveries in the eighties, the Government in July 1989, offloaded the Company from the Federal Budget allowed it to manage its activities with self generated funds. • The financial year 1989-90, was OGDC's first year of self-financing. • The initial target during the first year of self- financing was generate sufficient resources to maintain the momentum of exploration and development at a pace visualization in the Public Sector Development Program (PSDP) ) as well as to meet its debt servicing obligations. • OGDC not only generated enough internal funds to meet its debt obligations but also invested enough resources in exploration and development to increase the country's reserves and production.
  76. 76. Conversion into Public Limited Company • Prior to 23 October 1997, OGDCL was a statutory Corporation, and was known as OGDC (Oil & Gas Development Corporation). • It has been incorporated as a Public Limited Company with effect from 23 October 1997 and is now known as OGDCL (Oil & Gas Development Company Ltd.)
  77. 77. Initial Public Offering • Government of Pakistan disinvested part of its shareholding in the company in 2003. • Initially 2.5% of equity was offered to the general public. • The said Offer received an overwhelming response from the general public and was recorded as a landmark transaction in the history of Pakistan’s capital markets. • In December 2006, the Government of Pakistan divested a further 10% of its holding in the company.
  78. 78. Fueling the Future • The Company on September 20, 2011 celebrated its Golden Jubilee. • The Company during the past five decades has come a long way from its modest beginnings to becoming the leading Exploration and Production Company of Pakistan.
  79. 79. Financial Over view Particulars 2001- 02 2002- 03 2003- 04 2004- 05 2005- 06 2006- 07 2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 Net Profit / Loss (Rs. In billions) 16.77 20.67 22.86 33.01 45.80 45.25 44.34 55.54 59.18 63.53 96.90 0 50 100 16.7720.67 22.86 33.01 45.8 45.25 44.34 55.54 59.18 63.53 96.9 Profit/Lossinbillionsafterdeductions Years Years of Profit / Loss of OGDCL Profit in Billions Let’s have a look on financial performance of Oil and Gas Development Company Ltd. from the past 12 years 2001 to 2012.
  80. 80. OGDCL’s Fields • OGDCL due to its major activities exploration and development of Oil fields have 283 wells drilled up to 31.12.2012. • 372 Appraisal and developed Wells. • 96 Discoveries.
  81. 81. Major Fields Sindh Punjab Balochistan KPK Tando Alam (Oil) Fim Kassar (Oil) Loti (Gas) Chanda (Oil) Lashari (Oil) Missan Kaswal (Oil) Uchi (Gas) Mela (Oil) Thora (Oil) Toot (Oil) Pirokh (Gas) Nashpa (Oil) Sono (Oil) Chak Noran (Oil) Sheikhan (Gas) Misan (Oil) Kal (Oil) Pasakhi (Oil) Rajjan (Oil) Bobi (Gas) Bahu (Gas) Qadirpur (Gas) Nandpur (Gas) Kunnar (Oil) Dakhni (Oil) Norai (Oil) Dhodak (Oi / Gasl) Jagir (Gas) Sadqai (Oil / Gas) Daro (Gas) Hundi (Gas) Results in net sales for FY2011-12 Rs.197.839 billion and earned Profit after Tax for FY2011-12 Rs.96.906 billion.
  82. 82. Financial Highlights of FY2011-12 • Sales Revenue increased by 2.71% to Rs.197.8 billion from Rs. 155.6 billion • Profit before taxation rose by 46.3% to Rs.133.1 billion and profit for the year increased by 52.5% to Rs. 96.9 billion from Rs.91.0 billion and Rs. 63.5 billion. • Earnings Per share (EPS) increased to Rs.22.53 from Rs.14.77. • Total dividend declared at the rate of Rs.7.25 per share from Rs.5.50 per share. • Total assets increased to Rs. 338.3 billion from Rs.261.8 billion. 2010-11 2011-12 0 20 40 60 80 100 120 140 160 180 200 sales Revenue Profit for the year 133.1 63.5 197.8 96.9 2010-11 2011-12
  83. 83. Excellence Awards • KSE Top Twenty Five Companies Awards for the sixth consecutive years. • Best Corporate Report Award for the fourth consecutive year. • Environment Excellence Award for the third consecutive year.
  84. 84. The Conclusion • All of the achievements are because of the visionary management and right decision making which is making beneficial the company, firm position economically and retain a good public image as well.
  85. 85. The Conclusion In Organizations like White Elephants! i.e. PIA , Pakistan Railways “Perhaps people felt there was nothing more they could do, you know? After all, how can someone be helped who doesn’t see the need? I described such situations as, “A White Elephant everyone can see but no one wants to deal with; everyone hopes the problem will just go away on its own.”
  86. 86. Winston Churchill Quoted: “Success is walking from failure to failure with no loss of enthusiasm.”
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