The Auditor General of Pakistan has unearthed 375 cases of irregularities, unjustified/irregular payment, weaknesses in internal control systems, damages, embezzlements and understatement of account balances, amounting to Rs 3.841 trillion in the country's badly performing power sector.
These irregularities have been pointed out in Pakistan Electric Power Company (Pepco), CPPA-G, Discos, Gencos, NTDC, PHPL, Power Information Technology Company (PITC), Jamshoro Power Generation Company (Genco-1) Central Power Generation Company-II, Northern Power Generation Company (Genco-III), Lakhra Power Generation Company (Genco-IV), Genco Holding Company (GHCL), Fesco, Gepco, Hesco, Iesco, Lesco, Mepco, Pesco, Qesco, Sepco, Tesco, Pakistan Power Parks Management Company Limited (PPPMCL), and National Parks Management Company Limited (NPPMCL).
Total auditable expenditure and revenue budget for the financial year 2017-18, under the jurisdiction of Directorate General Audit power was Rs 537.711 billion and Rs 678.447 billion respectively. The Directorate General Audit Power conducted audit of 91 per cent expenditure amounting to Rs 491.119 billion and 96 per cent of revenue amounting to Rs 650.795 billion on test check basis in accordance with the audit methodology as given in the Financial Audit Manual.
Recovery of Rs 476.432 billion was pointed out in the audit report and recovery of Rs 267.636 billion was established during the audit year 2017-18. Recovery of Rs 12.336 billion was affected from January to December 2018.
The Audit pointed out 125 cases of unjustified/ irregular payment/ expenditure due to violation of companies' own rules/ regulations amounting to Rs 504.213 billion, 43 cases pertaining to recoveries amounting to Rs 2.215 trillion, 63 case of irregularities/ violation of PPRA, Nepra, GFR and regulatory laws and regulations amounting to Rs 327.061 billion, 90 cases pertaining to weaknesses of internal control systems amounting to Rs 321.142 billion, 47 cases pertaining to damages, accidents, negligence and others amounting to Rs 327.261 billion, five cases of embezzlement of public money, theft and misuse of public resources amounting to Rs 4.309 billion and two cases pertaining to over and understatement of account balances amounting to Rs 146.770 billion.
The audit report states that in Discos, 1,089,253 consumers of all categories including government departments defaulted with respect to payment of energy charges of Rs 522.275 billion. The Equipment Removal Orders (ERO) were issued and partially executed as only meters were removed instead of whole electrical equipment. Non-adherence to Authority's instructions resulted in non-removal of electrical equipment and non-recovery of energy charges amounting to Rs 522.275 billion up to FY 2017-18. In Discos, an amount of Rs 306.697 billion was recoverable from running and permanent disconnected energy defaulters (government and private sector) for the period exceeding from two months to more than three years. In this respect, no efforts were made by the management to accelerate the recovery from defaulters. Owning to increasing trend of receivables, Pepco was facing financial difficulties in discharging its obligations toward Power Sector Companies (PSCs) and IPPs. Non-adherence to Wapda Commercial Procedure resulted in non-recovery of Rs 306.697 billion from energy defaulter up to the FY 2017-18.
In CPPA (G), Discos, Gencos and NTDC, 310 contracts/ purchase orders/ power purchase agreement were made with different contractors/ suppliers and power producers for execution of work/ supply of material and procurement of energy. The contractors/suppliers / IPPs and Gencos could not complete the works/ make supplies within the stipulated period, hence, they were liable to pay the liquidated damages of Rs 264.698 billion but the amount was either not recovered or less was recovered.
Audit has recommended that there is a dire need for improvement in the financial liquidity position of the power sector. For this purpose, the management needs to prepare financial improvement/ recovery plans to avoid the accumulation of circular debt.
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