Auditor General of Pakistan (AGP) has detected non-recovery of a huge amount of Rs 4197.74 million by the Food Department of Khyber Pakhtunkhwa in head of subsidy, security and missing wheat during financial year 2014-15, said Audit Report 2015-16. Speaker referred the matter to the Public Accounts Committee (PAC) after the said audit report was presented in the KP provincial Assembly. Speaker Mushtaq Ahmad Ghani heads the PAC that has representation from all parliamentary parties of the KP legislature.
During the financial year 2014-15, in the office of Director Food, Khyber Pakhtunkhwa, it was noticed that an amount of Rs 4,157.18 million was outstanding against federal government on account of subsidy on wheat to the flour mills in FATA. The federal government paid only an amount of Rs 293 million. But, no strenuous efforts were made by the local office for early recovery of outstanding amount and it was due to non-observance of rules and weak internal controls.
The matter was pointed out in August 2015. The management replied that Food Department began wheat supply to FATA during 1990-91 and continued till 2010-11. It also claimed that to making full efforts for the recovery.
The audit requested the department repeatedly for holding Departmental Accounts Committee (DAC) meeting. However, DAC meeting was not convened and it has to recommend the taking up the matter at higher level to recover the outstanding subsidy.
Another non-recovery of Rs 27.73 million has been noticed in head of security from contractors. According to Clause-6 of the guidelines/procedure and tender forms for the transportation of indigenous wheat from Punjab to Khyber Pakhtunkhwa for 2014-15 and Clause-2 of the contract agreement executed with the contractors, on acceptance of rates, the successful bidders have to execute an agreement and provide 10 percent bank guarantee/cash security of the freight value in favour of government.
During the financial year 2014-15, in the office of Director Food Khyber Pakhtunkhwa it was noticed that different carriage contractors were awarded contract for the carriage of indigenous wheat from Punjab to various districts of KP province. It was specifically mentioned in the guidelines and procedures attached with the tender form that the successful bidders would have to execute an agreement and provide 10pc bank guarantee/cash security of the freight value within 7 days, failing which the earnest money shall stand forfeited in favour of government.
It was observed that the contract agreements were executed by the contractors, but 10pc security was neither deposited in the shape of bank guarantee nor cash security was deposited with the Director Food, which indicates that the above clauses of the tender form as well as contract agreement were violated and the contractors were given undue benefit of Rs 27.73 million. The loss occurred due to weak internal controls and non-adherence to rules.
The irregularity was pointed out in August 2015 and the management replied that the work order was issued to all concerned District Food Controllers and Storage and Enforcement Officer Peshawar/Azakhel and were directed to collect security at the rate of 10 percent of freight value as a cash security in the name of Director Food Khyber Pakhtunkhwa as call deposit/TDR. The carriage contractors deposited the cash security. The reply is not satisfactory as no proof was provided.
The audit requested the department repeatedly for holding of DAC meeting. However, DAC meeting was not convened till finalization of this report. So, the audit has recommended investigation into the matter for fixing of responsibility.
The third non-recovery was of Rs 11.34 million on account of missing wheat from a carriage contractor. According to a contract agreement, a contractor M/s Inam & Co was bound for carriage of PASSCO wheat from Punjab. The contractor was required to arrange to deliver the wheat at the recipient station within the stipulated period.
In case the truck loaded with wheat is lost while on way to its destination, the contractor will ensure its delivery within fifteen days of its loading failing, which the contractor will make good the loss in kind within one month from the date of loading.
In case the quantity is not delivered within one month, double than the landed cost will be recoverable from the contractor for which no excuse will be acceptable to the employer. According to correspondence made by PASSCO with the Food Directorate, the authorized representative of Khyber Pakhtunkhwa will be responsible to check the weight, quality of wheat stock and bardana at the dispatching point before loading.
During the financial year 2013-14, in the office of Storage and Enforcement Officer Azakhel, it was noticed that 1525 bags of 152.763m-tons of indigenous wheat were shown transported through M/s Inam & Co from Khanewal in two trucks on 13.09.2013 but they were not received at the destination and were found missing till 25.12.2013, which were shown to have been received on 26.12.2013. However, the department failed to recover double cost plus carriage charges of Rs 11.34 million from the contractor by invoking the relevant clause of the contract agreement, instead 10pc security of Rs 1.64 million was also released.
Similarly, 1389.481 m-ton wheat costing Rs51.81 million was transported from Punjab through the same contractor up to 12.09.2013. However, as per letter No.640/S&EO/NRC/Azakhel dated 12.09.2013 by the local office, the transported wheat was found substandard mixed with sand etc, of high moisture contents. Neither the wheat was replaced and nor laboratory tests were carried out and no responsibility was fixed on Food Department representatives present at the loading points to check the quality of wheat. The non-recovery was pointed out in December 2014, but the management furnished no satisfactory reply.
The matter was discussed in the DAC meeting, which directed conducting of inquiry by the admin department within 30 days to check that the penalty of Rs 546,302 was imposed according to a clause of the contract agreement and result be shown to audit. But, no progress was reported to the audit that has recommended the implementation of the decision of DAC and the explanation of position before the Public Accounts Committee (PAC).
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