RECORDER REPORT

PESHAWAR: The Auditor General of Pakistan (AGP) has detected non-recoveries of the outstanding dues of over Rs 3.384 billion of energy from Central Power Purchase Agreement (CPPA) and Peshawar Electric Supply Company (PESCO) and overpayment of Rs 3.08 million due to allowing higher dollar conversion rate in the accounts of the Khyber Pakhtunkhwa Energy and Power Department, said Audit Report on the accounts Year 2016-17.

The non-recovery was noticed during the financial year 2014-15, in the office of Pakhtunkhwa Energy Development Organization (PEDO) wherein the Director O&C has claimed energy tariff dues worth Rs 2,386,794,000 relating to Malakand-III Hydel Power Project (HPP) from National Transmission and Dispatch Company (NTDC) through CPPA on monthly basis.

In response, the CPPA did not pay the amount in accordance with the provisions of Article 9.6 of the CPPA. It was further found that the payment of dues cleared by CPPA did not match the claims of PEDO rather paid lesser amount in most of the period.

Furthermore, the CPPA did not pay energy charges according to claims of the PEDO rather than from the months of Feb to June, lesser amounts were paid as compared to actual claim of the PEDO while in the earlier excessive.

Moreover, the payment from CPPA did not have any reference to the payment claimed by PEDO, therefore, it could not be ascertained as to which period the dues were cleared and how much is outstanding.

The local office did not carry any reconciliation of dues and also did not have any proof of receipt of payment because all the payments were directly made to the concerned bank account.

The audit pointed that all payments made by CPPA were required to have been properly reconciled on monthly basis and recorded in the ledgers separately with clearly shown amount of outstanding dues, if any, against the CPPA, but neither record was available nor any action take towards reconciliation and recovery of outstanding dues by the local administration.

Less realization occurred due to weak financial and internal controls and when pointed out in June 2016, the management stated that written reply would be furnished later on.

Audit requested the department repeatedly, through DO letters, for holding of the Departmental Accounts Committee (DAC) meeting, however, neither DAC meeting was convened nor any progress intimated till finalization of the audit report.

Audit has recommended investigation into the matter and all the claims and payment reconciled with CPPA, besides recovery of outstanding amount.

The second case of the non-recovery of outstanding dues to the tone of Rs 998.00 million from Peshawar Electric Supply Company (PESCO).

During the financial year 2014-15, in the PEDO it was noticed from the review of joint verification report of the monthly generation and export of energy to PESCO from the Pehur Power Complex and payment of outstanding dues made by the quarter concerned, that an amount of Rs 2,313,000 was less paid as compared to the claims made during the year. However, the payment so made did not have any reference to which period the payment relates.

The details showed that an amount of Rs 46,037,000 was paid by PESCO against the demand for the difference remained unpaid. Furthermore, payment was made directly to bank on on-line basis therefore the local office has no documentary evidence in support of payment. The ratio between import and export price is not matched as it was about 1:10 and the payment was also not made on the basis of agreed PPA. When pointed out in June 2016, the management replied that it was decided with PESCO that the energy generated would be sold to WAPDA @Re 1/KWh has an interim arrangement and once the tariff is determined by NEPRA and power purchase agreement (PPA) signed with PESCO the arrears would be claimed. Since PPA has not been signed with PESCO/NTDC they are receiving payment for energy sold @ Re 1/KWh. As such Rs 998,000,000 have been accumulated against PESCO as of today. The amount is not loss, rather it is outstanding payment.

The audit termed the reply of the department not tenable and repeatedly requested for holding DAC meeting, however, neither DAC meeting was convened nor any progress intimated till finalization of the audit report.

Audit recommended the recovery of the outstanding amount.

The audit has also detected an overpayment of Rs 3.08 million due to allowing higher dollar conversion rate.

It was noticed during financial year 2014-15 in PEDO that contract for the construction of Koto HPP Dir was advertised and was finalized with the bid cost of Rs 12,599,336,000/- in favour of M/s Server and Co. Sichuan Silian and Chong Qing JV.

The contractor applied for advance payment of Rs 262,654,040 in light of provision of the clause 33.1 of the contract agreement and submitted bank guarantee issued by ABL Islamabad for $2,570,000,40.

It may be added that on 4th March 2015, the conversion rate of the US Dollar to Pak Rupee was Rs 101, therefore, the value of bank guarantee comes to Rs 259,570,004 as such Rs 3,084,036 (262,654,040 - Rs 259,570,004) was allowed in excess of the amount of guarantee submitted by the contractor, and resulted in over payment of Rs 3,084,000 to the contractor.

The overpayment to contractor was due to financial indiscipline and weak internal control. Audit has recommended investigation into the matter, fixing of responsibility against those responsible to recovery the amount.