The Auditor General of Pakistan
(AGP) has found embezzlement, misappropriation and irregularities of around Rs
980 billion in the account of Water and Power Development Authority (Wapda) and
Pepco, under the Ministry of Water and Power in the audit year 2013- 2014 . The
AGP has submitted a report to the President on 26th of March 2014 and has asked
him to investigate into the particular cases.
The sum is equivalent to nearly one - fourth of Rs 4 trillion federal budget for
fiscal year 2015 - 16, and can explain why the government has to infuse huge
subsidies out of taxpayers' money every year to clear the circular debt that
keeps revealing over and over again.
Over the past five years, the federal government is assessed to have infused
more than Rs 2 trillion into the force segment, besides expanding consumer
tariff by around 200 percent.
On the top of that , the AGP has also made observations over Rs 4.2 trillion in
an unsettled audit backlog from the past few years.
The audit pertained to Rs 414 billion of expenditure and Rs 898 billion of
revenue for fiscal year 2012 - 2013.
In its report to the President of Pakistan - as mandated under Article 171 of
the Constitution -the AGP has put together seven broad categories of findings
from an audit of the accounts of Wapda, four generation companies (Gencos), 10
distribution companies (Discos) and the National Transmission and Despatch
Company (NTDC)
Wapda's Directorate General of Audit - a specialized wing empowered to look
after force sector accounts - told it had ignored the occurrences of
misappropriation, fraud and other anomalies amounting to less than Rs 1 million.
In fiscal year 2012 -2013, the directorate said , an audit found 184 instances
of irregular expenditures and unjustified installments and rule infringements
adding up to 368.65 billion.
Another 88 cases , worth Rs 572.63 billion, pertained to non - recuperations and
overpayments, 18 cases to accidents and carelessness that cost around Rs 19.5
billion., Rs 5.8 billion was linked to cases where there were shortcomings in
internal control frameworks : and transactions of around Rs 11.8 billion were
called into question over non - creation record.
Another nine cases , worth around Rs 350 million , were related to embezzlement
of open cash and through theft and misuse of funds.
However , at the occurrence of audit, only Rs 31.9 billion could be recouped and
the AGP pointed out that it was beyond their capacity to carry out a "100
percent" audit of these entities.
But the AGP pointed out Wapda's internal control mechanisms and its corporate
entities conducted whole audits, it also comprised consumer service offices and
carried out physical examinations too.
The AGP said that the reappearance of continual irregularities "cast a shadow of
doubt on the effectiveness of the internal control system". He further said that
internal controls were bit by bit degenerating and unauthorized extension of
load , non implementation of equipment removal orders , theft of material and
electricity and contravention of procurement rules as well as the Nepra Act had
been on the increase.
The audit divulged that in FY 2012-13 power distribution companies could not
collect Rs 401 billion from various defaulters- while the procurement of
material and consultancy services, provision of PC 1s contracts included the
defying of procurement rules.
"There were poor monitoring of revenue collection , embezzlement of reserves,
misappropriation and theft of material , misuse of public savings ,incorrect
billing, non-implementation of commercial procedure and non-adherence to
provision of power policy , the AGP stated.
Highlighting some of the major inconsistencies, the AGP said Rs 139.3 billion
worth of power charges could not be retrieved from consumers because of (SOPs)
the standard operating procedures for evacuation of meters , equipment and
connections of defaulting consumers were not implemented in the case of 734,465
consumers across all categories .Simply the meters of defaulting consumers were
taken out and they kept on getting electricity.
Another Rs 247 billion was not recuperated from dead defaulters (both in
government and private sector) and no endeavors were made to accelerate
recuperation from defaulters. Inferable from expanding pattern of receivables,
Pepco was confronting money related troubles in releasing its commitments toward
influence segment organizations and influence makers.
It is said that distribution companies also endured Rs 36 billion losses by
virtue of anomalous line losses beyond Nepra's targets, while another Rs 31
billion was not recovered from 555,149 running defaulters. It is said around Rs
12 billion was lost because of insufficient power production at Guddu Power
Station.
The audit further pointed out Rs 74 billion losses due to irregular delay in the
initiation of a major combined cycle power plant at Chichoki Malyan , including
Rs 16 billion due to cost overruns and Rs 51 billion due to blockage generation
revenue . It is said that another Rs 43 billion had been lost in 2012 - 13 alone
over delays in the Nandipur venture. Another Rs 15 billion was not recuperated
from IPPs contractual workers on account of liquidity damages.
The auditors suggested that the government follow Wapda to complete hydropower
projects under given timelines and that the Ministry of Water and Power should
improve internal controls within all allied companies to stop illicit extension
of load and theft of material and electricity and improve systems in terms of
investigations, fixing of duty and transparency.
Imran Khan's views on Power Sector Corruption
Tehreek - e -Insaf (PTI) Chairman , Imran Khan says those responsible for
stupendous corruption revealed by AGP in audit of power sector 2012 - 2013 must
immediately be held accountable for Rs 980 billion of public money.
In a statement Imran Khan said :
"All those guilty should immediately be arrested and held accountable beginning
from the top and going down the chain of command of the bureaucracy."
Imran Khan added:
The accounts of Water and Power Development Authority (Wapda) and other power
companies have shown that the entire power structure has been suffering from
pervasive corruption and mismanagement.
PTI chief expressing his resentment said that even today these entities continue
to function in a questionable and non translucent manner, therefore the energy
crisis carry on to get aggravated.
He further pointed out mega corruption of Rs 980 billion was equal to almost one
- fourth of the Rs 4 trillion 2015 - 2016 federal budget.
He noted in financial year 2012 - 2013, according to the directorate itself, 184
cases of irregular expenditures, rule violations and unjustified payments were
discovered amounting to Rs 368.65 billion. He said that the revelations about
non - recoveries, over payments, weaknesses in internal control mechanisms etc,.
show the decaying organizational structure due to corruption , fraud and overall
mismanagement.
Imran Khan concluded that the time has come to explore and hold accountable all
those who have defrauded the nation of the taxpayers' money.
AGP's Report Shows Significant Improvements
The power sector has shown noticeable improvements and has been able to utilize
90 percent of its available generation capacity and recorded 16,890 MW
electricity generation against 18,616 MW underrated generation capacity
previously.
This has been mentioned in the audit report by the AGP to the president of
Pakistan for the period 2012-2013 (previous government tenure) till 2014-2015.
As per report domestic load shedding has been decreased from 8-11 hours to 6-8
hours while industrial load shedding has brought down from 8-12 hours to zero
since November 2014 except during January and Ramadan.
The report further elaborated that improvement in cash flow has been guaranteed
by implementing the merit order dispatch - using economical plants , introducing
uniform load management ,differentiated load management by identifying higher
theft areas and bringing all DISCOs stock to CPPA.
As a result the power sector has been able to pay better and the PSO has
received 101 percent of its outstanding during 2014-2015 as compared to 77
percent during 2013-2014, IPPs received 102 percent in 2014-15 as compared to 85
percent during 2013-14 and gas companies 106 percent in 2014-15 as compared to
104 percent in 2013-14.
The lower burden on national exchequer has improved the power sector a lot. In
2012- 13 334 billion was the subsidy provided by the government accounting for
2.4 percent of GDP . Due to better fiscal management in 2013-14 the subsidy was
brought down to 292 billion rupees making it 1.7 percent of the GDP which
further decreased to 221 billion in 2014-15 making it 0.75 percent of GDP. The
ministry is making more efforts to bring down the subsidy.
Similarly ,the increase in circular debt in 2013-14 was 203 billion making it
0.7 percent of GDP while in 2014-15 it registered only 49 billion rupees
increase accounting for only 0.17 percent of GDP.
New policies have been made for investment facilitation, adaptable and
permitting security documents have been ensured and investors have greater
access to the potential power projects. As a result around 15,000 MW of power
sector projects are now on fast track and in different stages of completion.
The energy sector faced a generation deficit of around 6,000 MW in 2013
resulting improper load management , unpredictable load shedding, burden on
fiscal resources etc,. Moreover, the national transmission system was highly
risky and there were challenges for new investment in the power sector. The
present government has taken major generation optimization plan resulting in
improvement of performance of GENCOs on one hand and improving IPP plants
availability during summer on the other. Similarly effective measures have been
taken to remove transmission and distribution constraints.