ISLAMABAD: The Auditor Gene­ral of Pakistan has identified leakage, malfeasance and dozens of other loss-making practices to the tune of Rs4.5 trillion in the country’s ever-bleeding power sector that have put the nation on the brink of collapse.

The AGP, in his report, expressed concern over lack of accountability and poor response to corrective measures.

In the audit report on the accounts of Power Division and its attached organisations for 2023-24, the AGP published over 442 pages — the largest among the federal government entities — of audit objections, highlighting non-recoveries, over-payments, poor asset and financial management, embezzlement, theft, fraud and over-billing, to name a few.

It said the Central Power Purchasing Agency — a commercial arm of the power division acting as financial agent of power companies — is required to report on a monthly basis the failure of any distribution company (Disco) to recover bills to the power and finance divisions for ‘suitable substitute actions’.

Expresses concern over absence of accountability and resistance to reform

However, the CPPA audit revealed that an amount of Rs2.53tr was receivable from Discos, including K-Electric, on account of sale of energy.

Due to this huge blockage of funds, the power sector is under stiff financial crunch and payments to producers are delayed. Consequently, late payment surcharges ranging from KIBOR + 2pc to KIBOR + 4pc are being charged by power producers.

“Had this huge amount been recovered from Discos, liquidity position of power sector could have improved, thereby eliminating the burden of circular debt and late payment surcharges,”, the audit report said.

It added that “Financial inefficiency resulted in non-recovery of Rs.2,530,645.77 million on account of sale of energy from Discos during 2021-22”.

Despite this and in violation of commercial policy and billing and collection procedures, the audit of discos disclosed that “an amount of Rs877.596 billion was recoverable from running and permanently disconnected energy defaulters” both in the government and private sectors.

“In this respect, no efforts were made by the managements to accelerate the recovery from defaulters.

Non-recovery of Rs877bn

Non-adherence to commercial procedure resulted in non-recovery of Rs877.596bn from energy defaulters up to 2022-23“.

The report said the law required that “all losses whether of public money or of store, shall be subject to preliminary investigation by the officer in whose charge they were, to fix the cause of the loss and the amount involved”.

However, during the audit of National Power Parks Management Company Ltd (NPPMCL), it was observed that power generation plants generated 41,774.68GWh during 2020-21 to 2022-23.

Out of total generated units 619.6 million units were generated by using costly fuel i.e., HSD due to non-availability of RLNG, which caused consumers to pay extra cost of Rs61.97bn.

It said discos caused over Rs196bn losses on account of higher system losses than targets set. System losses ranging from 8-21pc for various discos are charged to consumers through tariff while Rs196bn was over and above these limits.

The audit said the regulator had fixed targets of energy losses ranging from 8.84pc, 9.10pc, 18.57pc, 8pc, 12.34pc, 20.16pc, 17.05pc, and 9.21pc for financial year 2022-23 in respect of Fesco, Gepco, Hesco, Lesco, Mepco, Pesco, Sepco and Tesco, respectively.

However, it was observed during audit that “the percentage of T&D losses was more than the targets of losses set by Nepra. Hence, 11,609.715 million energy units valuing Rs196.384bn were lost due to non-adherence of regulatory targets in 2022-23.

Published in Dawn, August 27th, 2024