by Khaleeq Kiani in Dawn, October 26th, 2020
ISLAMABAD: The Auditor General of Pakistan (AGP) has found fault with the utilisation of almost Rs3 trillion public funds by the power division, involving huge irregularities, mismanagement, misappropriation and embezzlement.
In its report for the audit year 2019-20 that has been laid before the National Assembly after a delay of almost eight months, the AGP also put question marks over sustainability of the power sector under the current state of affairs, governance shortcomings and weak financial and administrative controls.
The audit is based on financial accounts for fiscal year 2018-19 – the first year under the Pakistan Tehreek-i-Insaf government.
In particular, the country’s top auditor highlighted a total of 318 cases in the accounts of the power division and its associated entities in which Rs2.965tr worth of public funds had been misused. In its key findings, the AGP said 64 varied irregularities of more than Rs107 billion pertained to procurement of electrical equipment, civil and electrical works, consultancy services and contractual mismanagement.
In 50 cases, the AGP highlighted recoveries of more than Rs2.5tr and pointed out 108 other cases of violation of internal rules and regulations of the audited entities involving Rs64bn. In another 50 cases, violations of regulatory laws and regulations involving Rs184bn were unearthed while loss of more than Rs4bn was reported due to fraud, embezzlement, misappropriation and theft in 21 cases.
In four cases, irregularities of Rs1.2bn were reported on account of management of accounts with commercial banks and Rs263 million worth of 21 cases were highlighted pertaining to human resource regularities.
On top of these major findings, the AGP also expressed dissatisfaction over the performance of power distribution companies (Discos) in reducing transmission and distribution (T&D) losses. It said the Discos suffered Rs240bn losses on account of 18.3pc (at the rate of Rs13.06 per 1pc loss) T&D losses in FY2017-18, which increased to Rs276bn in 2018-19 on account of 17.7pc T&D loss at the rate of Rs15.18 per 1pc loss. This meant that even though a minor reduction of 0.6pc was achieved in technical loss that year, it was overturned by the tariff increase……
It was highlighted that debt management for the power sector was being carried out in an ad hoc manner as was also evident from Rs810bn debt parked in the Power Holding Private Limited (PHPL) — a shell entity of the power division. PHPL loans and their financial impact are an extra uncovered cost relating to the purchase of energy. Even the Rs200bn Sukuk bonds issued in 2018-19 through Meezan Bank was a risky venture as 70 properties of the power companies “were sold and leased back” along with issuance of the Sukuk bonds. “This implies that power sector government properties may face a risk of en-masse sale/transfer out to private bodies on account of default in nay principal repayment”.https://www.dawn.com/news/1587032/power-division-misspent-rs3tr-points-out-agp
