Even as Pakistan Muslim League-Nawaz leader and newly elected prime minister Nawaz Sharif speaks of plans to improve rail and road links with China, new railways minister Saad Rafique on Tuesday put all deals for new railway engines from China on a hold as they were substandard.
At the same time a major US supplier pulled out of a $540-million deal for 150 locomotives to allow the new government to buy engines in a transparent manner without losing time, Rafique told Geo TV.
He said the railways was suffering losses of over Rs40 billion this year, it had to repay foreign loans of Rs35 billion and had taken overdraft of Rs40 billion from the State Bank of Pakistan.
He said that he had put all purchases of Chinese engines on hold as these engines were "total trash and not a single engine with the Pakistan Railways (PR) currently was 100 per cent fit to run".
Among others, the ministry of railways has blacklisted a Chinese firm that was to supply 75 locomotives under an agreement signed in 2008.
''We were given 69 engines by China (in 2001) but they were all 'Number 2' quality and the PPP government ordered purchase of 50 more of the same engines. I have put all of this on hold and a probe has started on who is responsible,'' the minister said.
Leader of Imran Khan's PTI Shah Mahmood Qureshi, who was also on the Geo TV show, supported the railways minister and demanded that those who had made money on these shady deals must be exposed and punished. The railways minister agreed.
But the real development came from the US engines supplier Electro-Motive Diesel, a US company which was awarded a tender for 150 new engines by the PPP government in October 2012 at a cost of $540 million.
Another US company challenged the tender in the Lahore High Court (LHC) and a stay order was issued, which has been pending ever since.
But as the new Nawaz Sharif government has taken over, the US company has written to the government that it was withdrawing from the deal.
This will end the case pending in the LHC and the new government can now go for a new tender. The US company has stated that it will participate in the fresh tender.
The categorical statement by the railways minister that the Chinese engines were a total failure has come in direct contrast to the efforts of the PPP government to buy more such engines from the same supplier.