LAHORE: The Ministry of Water and Power has formed a four-member committee to inquire into the procedure of and rationale behind lavish expenditure on purchase of around 450 vehicles by the Lahore and Gujranwala electric supply companies.

The committee would look into the “justification for incurring such huge expenditure on purchase of vehicles keeping in view the financial constraint of power sector and austerity measures enforced by the federal government.”

Both Gepco and Lesco have reportedly purchased around 400 single cabin mini trucks and around 50 cars in October 2014 and February 2016, costing the sector around Rs700 million. Both the companies did it despite clear-cut instructions by the ministry to the contrary given the “circular debt” problem.

Both companies have been found involved in “retaining money for vehicles” in the monthly review meeting, inviting the ire of the ministry.

According to the terms of reference (ToRs) of the committee, headed by a deputy secretary, it would see whether no-objection certificates (NOCs) were acquired from the federal government before the purchase and whether budgetary provision was available to them.

The committee has also been told to carry out cost-benefit ratio analysis of the vehicles and check whether the PPRA (Public Procurement Regulatory Authority) rules were observed during the purchase and allocation of vehicles (to officers concerned).

“In fact, the ministry is concentrating on controlling the circular debt and has not been allowing any expenditure unless absolutely essential for running affairs of the sector,” says an official of the Lahore Electric Supply Company (Lesco).

“The second anti-expenditure layer is added by the federal austerity drive. The companies fell foul with the instructions on both accounts and the ministry has now moved against them.”

Another official sees problem in “the confusion about where they (companies) belong to.” These companies have independent boards of directors, which, in most cases, are at odds with the ministry – considering its instructions as interference and keep resisting these. They sometimes allow even unjustified expenditure to keep the management of the company on the right side of the divide. This management dichotomy often leads to bad decision-making at the company level. In this case as well, the companies got permission from their own BoDs and went ahead with the purchase. Now the ministry is considering it as violation of its instructions. So, the menace goes deeper in governance of these power sector companies. And unless the federation resolves this basic dichotomy, the situation would not improve, explains the official.

The ministry looks after the entire sector whereas the BoD is concerned with only part of it. Such a situation also places them at different levels of operation and preferences, he says and demands that the anomalies are removed forthwith to prevent such occurrences in future.

Published in Dawn, April 14th, 2016