September 23, 2006	Saturday	Sha'aban 29, 1427

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ISLAMABAD, Sept 22: The auditor general of Pakistan (AGP) in its latest report for the year 2004-05 has detected over Rs6.144 billion irregularities in the accounts of Pakistan Railways (PR).

“Fifty plots situated at prime locations in big cities of Pakistan were leased out to a consortium for installation of CNG stations without ascertaining their market value as required under advertised condition of lease. The consortium had also not paid the lease rent upto November 2005, causing a loss of Rs190 million,” the report said.

It said that railway land in the shape of plots at prime locations in almost all big cities were advertised/offered by the PR in June 2000 on 33 years lease period for installation of CNG stations on the basis of 15 per cent of the cost of land as annual lease rent and 10 per cent of the cost of land as security.

“The cost of land was neither mentioned in the publication/biddings nor was provided to audit on requisition. In the absence of the information regarding the cost of land, it was not possible to determine annual rent and security money,” it said.

The report further said: “Contrary to the advertised conditions for lease, the agreement was executed with a consortium consisting of M/S Nopawong Construction Company of Thailand and M/S Ajami, a private company of Pakistan, on fixed payment of Rs1.380 million per annum as lease rent and Rs2.5 million as commitment fee per plot.”

It said the matter was taken up with the ministry and the railways administration also submitted a reply in May 2005, but that “reply was not acceptable”.

The report objects to the leasing of railway schools at nominal rent. It said the PR administration decided to lease out 19 railway schools with a view to improve quality of education and reduce financial burden of the organization.

According to the report, each school having average total area of 81,418 square feet and average covered area of 21,237 square feet was leased out to M/S Educational Services (ESL) in the year 2001 at a nominal rent of Rs5,000 per school per month. The ESL, it said, rented out canteens of three schools located in Lahore at an average monthly rent of Rs9,167 and average security deposit of Rs123,333 per canteen. This alone substantiates audit’s point of view that school were leased out at nominal rent.

The AGP report points out a loss of potential earnings of Rs26.419 million due to delay in overhauling of 37 non-AC passenger coaches received in Carriage and Wagon Shop, Mughalpura during March 1998 to November 2000. It said that the matter has been taken up several times with the ministry but it has not come out with a satisfactory reply.

The report also pointed out various incidents of financial irregularities, including non-recovery of lease rent and security fee amounting to Rs190 million, non-recovery of Rs157.705 million due to poor contract management, non-recovery of dues amounting to Rs44.212 million, excess procurement of material worth Rs23.896 million, undue payment of interest of Rs22.069 million, incoherence of avoidable expenditure of Rs20.424 million due to non-adherence to contract clause, loss of potential revenue of Rs7.590 million due to non-inclusion of penalty clause in the agreement, excessive purchase of material costing Rs5.288 million, loss of Rs3.629 million due to payment of fine to customs authorities, excess payment of Rs3.088 million to a contractor, irregular purchase of computer equipment and furniture amounting to Rs2.562 million and misappropriation of Rs1.78 million on account of recovery of electricity charges.

The report once again has a mention of the much-publicised corruption in the purchase of faulty locomotives from China. It said that 175 passenger coaches were purchased from China without fair competition and on a single tender causing a loss of over Rs5.5 billion ($92 million).