May 18, 2021

Subsidy for Rawalpindi Islamabad Metrobus Runs Into Billions of Rupees


Islamabad — The Rawalpindi Islamabad Metrobus service gave subsidy of over Rs. 3.5 billion in the first two years of its operation, according to a document shared by the Punjab Masstransit Authority (PMA).

The PMA, a Punjab government body that supervises all mass transit operations in the province, shared the records in response to a Right to Information (RTI) request filed by Media for Transparency.

The official document shows the Rawalpindi-Islamabad Metrobus service had a revenue of Rs. 774 million in financial year 2015-16 against expenditures of around Rs. 2.6 billion.

The deficit for 2015-16 amounted to Rs. 1.8 billion, which the government department accounted as subsidy

The subsidy for the Metrobus service increased by nearly 5% in financial year 2016-17 when monthly average expenses increased by Rs. 11.9 million but monthly average revenue only increased by Rs. 4.4 million.

The Punjab government provided subsidy of around Rs. 1.9 billion for the Rawalpindi-Islamabad Metrobus service in 2016-17, according to the PMA’s response to the RTI request.

The total amount in subsidy for the two years comes out to be around Rs. 3.7 billion. This means the service gave an average of nearly Rs. 5 million in subsidy every day.

The subsidy for the Rawalpindi-Islamabad bus service is shared by the Punjab Government and the Capital Development Authority (CDA) on behalf of the Federal Government. However, the CDA had not paid a major chunk of its share up until June, putting the burden on the PMA.

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Muhammad Ozair Shah, the PMA General Manager, said governments around the world pay mass transport expenses out of their own pockets.

“This subsidy should not be seen as a loss for the country,” Mr. Shah said. “(The mass transit system) has economic benefits not financial ones.”

He said the benefits of the Punjab mass transit projects can be seen in other areas. There is no need to widen roads, build new interchanges or underpasses, or buy more cars, he explained.

“It reduces vehicle operating cost and travelling time,” Mr. Shah said.

Umair Javed, a political commentator and policy analyst, agreed with Mr. Shah.

Mr. Javed said good public transport with affordable prices is imperative for the economic development of cities and this is a concept acknowledged around the world.

“I think when people use the public transport to travel, it opens up labour market opportunities for them and it reduces travel time as well,” he said. “It has a lot of economic advantages.”

Mr. Javed, who is a PhD candidate in political sociology at the London School of Economics, said subsidy should not be seen as deficit because deficit is a budgetary term which refers to the gap between government spending and revenues.

“Subsidy is used for one service or good while deficit is used for entire governments, private companies and departments,” he said.

A government gives subsidy if it feels the people will not be able to afford the actual price of a service and that it will affect its usage or it will cause a social disadvantage, Mr. Javed said. He cited the example of the government’s “150 billion” rupee subsidy on wheat, the staple food for Pakistanis.

Subsidies also have their pros and cons.

“The benefit of the subsidy is that it keeps the transport easy, accessible, and cheap,” Mr. Javed said. “The biggest disadvantage when you are giving a subsidy, whether it is on wheat or sugarcane or the Metrobus, is that it means the money you are giving as subsidy you won’t be able to spend it on any other thing,”

He said the government has limited resources and it needs to remain within its budget but this does not always happen, especially for a developing nation where the government has to spend more so it can develop.

The Rawalpindi Islamabad Metrobus, officially called the Pakistan Metrobus System, was inaugurated by former Prime Minister Nawaz Sharif in June 2015. The project, developed at a cost of Rs. 44.8 billion, connects Rawalpindi and Islamabad through a 23km track and features 24 bus stations, according to the PMA and news reports.

The project initially received public criticism on the grounds that the same funds could be spent on health and education instead. Environmentalists, civil society activists, and political leaders also protested against the Islamabad section of the bus service because trees were cut to make space for the dedicated bus corridor there.

This and other mass transit services in Punjab have also been a political point-scoring tool in the rivalry between the Pakistan Muslim League-Nawaz, which launched the services, and the Pakistan Tehreek-e Insaf (PTI).

PTI, now in pole position for government formation in the centre and Punjab, remained a staunch critic of the Metrobus projects in Punjab while it was in opposition, and is expected to reduce the subsidy reportedly.


A view of a Rawalpindi-Islamabad Metrobus station in Islamabad. Photo: Hassan Abbas

Since its launch, however, the PMA claims 116 million people have travelled by the Rawalpindi Islamabad Metrobus since 2015.

Ali Ahmed, who said he commutes via the Rawalpindi Islamabad Metrobus daily, is satisfied with the service.

“It is cheaper and more comfortable compared to the local vans we used to have,” he said. “The buses are air-conditioned and not congested.”

The local mini-vans Mr. Ahmed referred to used to ply the Murree Road route, which the Rawalpindi Islamabad Metrobus now traverses using a dedicated flyover corridor. The vans have now been moved to alternative routes by the city administration. The vans can typically seat 17 passengers but transporters often stuff them with as many as 20 passengers. The mini-vans, unlike the Metrobus, also do not keep a regular schedule.

Another commuter Sarmad Ashfaq, a computer science student, said he likes the Metrobus because it does not cause the inconvenience that passengers faced on private inter-city transport.

“The bus doesn’t take too long to leave a bus station,” Mr. Ashfaq said. “It saves a lot of time.”

He said the Metrobus has also helped reduce his daily fare because now he does not need to switch vans to reach his destination.

The Metrobus charges a standard Rs. 20-fare one-way. The fare has not changed since the service was started in 2015 despite variations in fuel prices.

“We have seen around the world that this cost cannot be reduced when developing systems like this. The subsidy only increases.” — Muhammad Ozair Shah, Punjab Masstransit Authority General Manager

Increasing the ticket price would reduce the subsidy. Mr. Ashfaq felt higher fares would reduce usage, but a study done by the International Growth Centre on the PMA’s similarly-run Lahore Metrobus service suggested commuters might be willing to use the service even if fare increased substantially.

Other than increasing the ticket price, Mr. Shah said one way to decrease the deficit is to sell advertisements on the bus stations. However, he said there is no guarantee that it will be profitable.

The PMA installed tuck shops at the Lahore Metrobus stations. But the venture failed due to the short waiting times for buses, Mr. Shah said.

He said reduction in loadshedding can reduce the service’s expenditures because the bus stations use diesel generators during power outages.

It is unlikely that the subsidy would decrease without government intervention.

“We have seen around the world that this cost cannot be reduced when developing systems like this,” Mr. Shah said. “The subsidy only increases.”

The Rawalpindi Islamabad Metrobus service has 68 buses, of which 60 are in use and eight are for backup, according to the PMA document. None of these buses are owned by the government, though. A private Turkish firm called Platform Turizm owns the buses.

Mr. Shah said the major costs of the Metrobus service are in procurement, operation and maintenance, all of which are outsourced to different private companies. The bus drivers are also provided by the Turkish company while the PMA provides them schedules to follow. The model has been successful, Mr. Shah said.

The PMA does not seem to have any plans to buy the buses or employ its own driving staff.

Mr. Shah said past experiences show it is not a good idea. He said the government had to completely disinvest its transport service in the 1980s but it is paying pension to the service employees until today.

“Why would we go again for a failed project?” he said.


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