Government entities engaged in construction projects: Overpayments, recoverable amount of Rs 22.24 billion detected

The Auditor General of Pakistan has detected overpayments and recoverable amount of Rs 22,245.92 million in federal government entities engaged in construction projects, according to the audit report for (2015-16). The federal government entities in which audit authorities have pointed out overpayments and recoverable amounts includes Capital Development Authority (CDA), Civil Aviation Authority (CAA), National Highway Authority (NHA), Pakistan Public Works Department (PWD), Estate Office, Federal Government Employees Housing Foundation (FGEHF), National Construction Limited (NCL) and Pakistan Housing Authority Foundation (PHAF).
The department also includes Evacuee Trust Property Board (ETPB), Frontier Corps (FC), Pakistan Coast Guards, Pakistan Rangers, Higher Education Commission (HEC), Workers Welfare Fund/Boards (WWFB), Bureau of Emigration and Overseas Employment (BEOE), Pakistan Medical and Dental Council (PM&DC) and Ministry of Planning Development and Reforms (Afghan Projects).
According to the annual report of Auditor General of Pakistan 2015-16 the management of the federal government departments accepted the stance of audit to the extent of Rs 10,015.76 million. Recovery amounting to Rs 413.55 million was made by the audited entities and verified by audit till the finalisation of this audit report. It says that in addition to the above stated recoveries, a sum of Rs 1,695.71 million was recovered by audited entities in relation to audit observations pertaining to previous years. Total recovery of Rs 2,109.26 million was verified by audit during 2015-16 till the finalisation of this audit report. The sum included Rs 1,367.74 million pertaining to overpayments and Rs 741.52 million on account of revenue receipt expedited, it says. The audit coverage also includes the revenue collection amounting to Rs 86,229.29 million against estimates of Rs 129,991.84 million by the audited entities.
Major audit findings included in the audit report are approval of Layout Plan of Housing Schemes by CDA, which were not transparent. CDA approved the Layout Plan of schemes on the basis of fictitious land ownership documents, etc. In a case, land reserved for public utilities was transferred in the name of CDA on paper, but the same did not exist physically. A commercial plot of a five star hotel near Convention Centre was auctioned by CDA at lesser value which resulted into a loss of Rs 7,492.78 million, it says.
According to the report, CDA re-scheduled the payment of dues of Rs 4,009.99 million in respect of a five star hotel "Grand Hyatt" without getting previous consent of Ministry of Finance and concurrence of investigating agencies as advised by the Legal Advisor CDA.
The audit found revenue of Rs 12,537.64 million on account of aeronautical/non-aeronautical receipts Right of Way charges, toll collection, solid waste management charges, rent, etc was not realised/recovered by CDA, CAA, NHA, Estate Office, FGEHF and WWB in thirteen (13) cases. CDA could not recover fine for non-conforming use of residential buildings amounting to Rs 758.10 million, it says.
The auditor also fund that overpayments/irregularities of Rs 2,771.07 million were made by CAA, NHA, Pak. PWD and PHAF to contractors due to incorrect calculation of price escalation and incorrect interpretation/application of price adjustment clause of the respective contract agreements.
It says procurement of works/services valuing Rs 68,945.64 million was made by CDA, CAA, NHA, HEC and PM&DC without calling open tenders/in violation of Public Procurement Rules in seventeen cases. The corruption watchdog has found that payment of Rs 1,812.60 million was made by Pak. PWD and Frontier Corps against the 'work done' without recording mandatory and certified measurements in the respective Measurement Books in two cases.
According to the report overpayment of Rs 1,418.32 million was made by CDA, CAA, NHA, Pak PWD, PHAF, HEC and WWB due to higher rates, excessive measurements, re-rating, separate payment of in-built component, non-deduction of rebate, non-adherence to specifications, etc.
Pay & allowances and other employee related benefits amounting to Rs 609.84 million were paid by CDA. CAA and WWF/Bs without approval of Finance Division. The audit authorities recommended that internal controls be strengthened to ensure that irregularities, as reported in this audit report, are pre-empted and fair value for money is obtained from public spending. Fact finding inquiries and disciplinary actions be initiated to fix responsibility in respect of cases involving misappropriation, fraud, overpayments, losses and irregular expenditure.
It further recommended that co-ordinated measures be put in place to remove encroachments on state lands and structures. The Planning Commission's guidelines for approval and funding of projects (project management life cycle) be followed in letter and spirit.
The audit report says that the contractual obligations be monitored by the management at every stage of contract execution. Advances to the contractors be granted strictly in line with contractual provisions and recovered accordingly, it further recommended.