Fraud exposed in purchase of transformers: Pepco fails to take action over inquiry recommendations

Pakistan Electric Power Company (Pepco) has failed to take any action over the findings of inquiry involving fraud and corruption of billions of rupees in buying substandard distribution transformers. The scam involved Rs 25 billion annually in the buying of transformers manufactured from recycled/scrap material and issuance of fake pre-qualification certificates by Pepco to the manufacturers with inappropriate manufacturing facilities.
The inquiry conducted by the committee formed by National Transmission and Despatch Company (NTDC) has held three manufacturing companies responsible for supplying substandard transformers; Pan Power, AB Ampere and Hammad Engineering. Inquiry report issued over three months back accuses these companies of procuring the transformers manufactured with the low quality scrap/ recycled materials and sold it to Wapda at the rates of transformers manufactured with brand new materials. Such transformers made with scrap materials last only one fourth the age of the transformers made with new material.
Pepco has caused huge losses to the national exchequer by buying poor quality transformers at the cost of transformers manufactured using brand new material. The inquiry report directed the competent authority to black list these companies. Despite the facts, the distribution companies continue their usual business. The services department of NTDC is also acquiring services of these firms and continues to issue them Inspection Certificates. It seems that the commission mafia is playing actively in pushing the huge scam under the carpet.
Although Pepco Managing Director in a letter dated 31 January of this year had directed to take immediate and priority action as per recommendations of the report. However no such action has been taken yet. The actual losses to the national exchequer are believed to be higher than evaluated. As the investigation conducted by FIA had revealed that fake custom documents were also submitted by these manufacturers. Both FIA and NAB are silent on this matter. Moreover, the FIA nominated officer to conduct this enquiry has also been replaced.
The matter would not have come to surface if the complainant had not raised the issue at the top level in Pakistan. It had then demanded strict punitive action against the culprit manufacturers which led to the formal inquiry. Complainant had disclosed that the procurement agency is not only involved in buying the substandard transformers but also issued fake prequalification certificates to those manufacturers who lacked appropriate manufacturing facilities.
Complainant had also claimed that this scrap / recycled material is purchased by the distribution transformer manufacturers from local market as well as from abroad. Pepco spends over Rs 25 billion on purchase of distribution transformers each year. Since transformers are key component in power transmission and distribution system, therefore NTDC has specified code policy and rules for oil and silicon steel - two basic items used in manufacturing of transformers. Wapda has approved list of countries to import these two basic items.
It is pertinent to mention here that prototype supplied by Chinese manufacturer was earlier rejected on the basis of using scrap material in the manufacturing of distribution transformers. Pepco should immediately act upon the findings of the inquiry report and blacklist those manufacturing companies that have caused billions of losses to the national exchequer.