The Auditor General of Pakistan has unearthed Rs 209 billion irregularities in the water and power sector companies during 2016-17, which were not considered significant enough to report to Parliament included in Memorandum for Departmental Account Committee (MFDAC).
These irregularities have been highlighted in 455 paras in audit report on the accounts of Water and Power Development Authority (Wadpa), Pakistan Electric Power Company Pepco and its corporate entities. According to audit, in Discos an amount of Rs 227 billion was recoverable from energy defaulters (public and private) for a period exceeding from two months to more than three years. In this regard, no effort was made by the management to accelerate the recovery from defaulters. Owing to the increasing trend of receivables, Pepco was facing financial difficulties in discharging its obligations toward Power Sector Companies (PSCs) and IPPs.
The power sector also witnessed a financial loss of Rs 143 billion for non removal of electrical equipment and non-recovery of arrears. In Discos, 427,590 consumers of all categories including government departments and Government of AJ&K defaulted to pay energy charges. The Equipment Removal Orders (EROs) were issued but partially executed as only meters were removed instead of whole electrical equipment.
In Discos, tariff differential and agriculture subsidy claims of Rs 52.735 billion were recoverable from the federal and Punjab governments. Non-recovery of long outstanding dues/ settlement of disputed claims were a recurring loss to the companies which was required to be recovered to enable the company to overcome its financial crises.
Audit has noted a financial loss of Rs 17. 3 billion due to line losses beyond Nepra's targets, huge refund of Rs 16 billion to consumers on account of wrong reading and detection, a Rs 11 billion loss due to non-recovery of GST claims from FBR, a Rs 6.863 billion loss due to excess heat rate than Nepra's standard.
Overall, the audit has found 14 cases of embezzlement of public money, theft, and misuse of funds amounting to Rs 946 million; 147 cases of irregular expenditure/ unjustified payments and violation of rules amounting to Rs 171 billion; 68 cases pertaining to weaknesses internal control systems amounting to approximately Rs 103 billion; 82 cases pertaining to recoveries and overpayments amounting to Rs 786 billion and 35 cases pertaining to others, accidents, negligence etc, amounting to Rs 259 billion.
The Auditor General also said that Wapda hydroelectric has failed to recover Rs 6.807 billion damages from two Chinese contractors ie M/s Sino Hydro Group and M/s Dongfeng Electric Corporation respectively for delay in projects like Tarbela 4th Extension ( Rs 3.024 billion ) and Jinnah Hydropower project ( Rs 3.784 billion).
The Audit has noted a loss of Rs 2 billion due to closure of power house of Khan Khwar Hydropower station Besham, a Rs 2.5 billion loss due to design deficiencies of civil and hydraulic steel works and a Rs 2.413 billion irregular expenditure in excess of revised PC-1 due to time and cost overrun and a Rs 1.4 billion undue benefit to the contractor- M/s Sino Hydro Group Ltd on account of milestone payments in Tarbela 4th Extension.
Jamshoro Power Generation Company - the sales of the company decreased to Rs 35.817 billion ( 19.23 per cent) during the current financial year and the company suffered a gross loss of Rs 2.453 billion ie 248.44 per cent higher from the previous financial year. It showed that the company was unable to generate enough revenue to cover its cost of generation and administrative & general expenses. Audit maintained that with current operational performance, the company was not able to meet even its break-even point and caused a consistent increase in the accumulated losses and liabilities of the company. In presence of such conditions, the company would require a heavy funding from GoP to maintain the going concern status.
National Transmission and Despatch Company (NTDC) has also suffered a financial loss of Rs 350 billion due to non-recovery of electricity cost from sister organisations, non recovery of mark-up from KE, irregular obtaining of long-term loan of Rs 17 billion, etc.
According to Audit, one of the major issues is the non-recovery of subsidies pertaining to tariff differential and agriculture from federal government and provincial governments. The refund of GST from FBR due to non-recovery of electricity charges or write-off from defaulter consumers is not being made. The management agreed to take up the matter with FBR through Ministry. The Discos could not collect Rs 232.7 billion from defaulters and a recovery drive has been launched by the Discos after it was highlighted by audit.
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