In audit report for FY 2022-2023, observations relate to procurement management, contract management, financial management, assets management, management of accounts with commercial banks, human resource issues, value for money and service delivery.
ISLAMABAD – The Auditor General of Pakistan has raised audit observations amounting to Rs356.505 billion on various hydro projects of Ministry of Water Resources, WAPDA and its entities during the financial year 2022-23.
This amount also includes recoveries of Rs.12.858.102 billion pointed out by the Audit, according the audit report of the accounts of MoWR and its various entities for the FY 2022-23.
The observation related to procurement management worth Rs 34.571 billion, contract management Rs 57.391 billion, financial management Rs 212.451 billion, assets management Rs 6.716 billion, management of accounts with commercial banks Rs 13.682 billion. HR & employees related issues 983 million, value for money and service delivery Rs 1,092 million and Rs 29,620 billion on accounts of others.
During audit from July, 2022 to June, 2023, it was observed that an amount of Rs.106.133 billion was recoverable from Central Power Purchasing Agency-Guarantee (CPPA-G) against verified invoices of the sale of energy. Non-adherence to PPA resulted in non-recovery of Rs.106,133 million from CPPA-G against sale of energy during the FY 2022-23.
The matter was taken up with the management in August, 2023 and reported to the Ministry in October, 2023. The management replied that the matter of recovery had already been taken-up with CPPA-G and progress achieved in this regard would be intimated to Audit. No further progress towards recovery was intimated till finalization of Audit Report.
Audit recommends that the management needs to pursue the recovery of outstanding dues amounting to Rs.106,133.366 million from CPPA-G at appropriate level.
During audit of accounts of the GM (Finance) Power for the period from July, 2022 to June, 2023,it was observed that Green Euro Bonds amounting to $500 million were issued to arrange funds for making payments of foreign currency components of DBDP and MDHP. However, the funds raised through issuance of the said bonds were deposited in local currency account (PKR) instead of US$ account @ Rs.158.30/US$ as on June 30, 2021. Later on, due to currency exchange rates fluctuations, the exchange rate of US$ to PKR had been increased to Rs.287.90/US$ from Rs.158.30/US$ as on June 30, 2023. Audit held that as these funds were raised specifically for making payments of foreign currency component, therefore, the amounts should have been kept in foreign currency account but needful was not done which caused foreign exchange loss of Rs.64,800 million.
The management replied that utmost efforts were made for opening and maintaining of foreign currency account. However, State Bank of Pakistan (SBP) was reluctant and had not allowed WAPDA to retain funds in foreign currency account.
The reply was not acceptable because funds raised from Credit Suisse loan for DHPP were kept in foreign currency account, whereas, funds raised through issuance of Green Euro Bonds were kept in PKR account which caused huge foreign exchange loss.
Audit recommends the management to justify placement of funds in local currency account instead of foreign currency account besides fixing responsibility.
During audit of accounts of two formations of WAPDA for the period from July, 2021 to June,2023, it was observed that General Sales Tax and Hydel Levies invoices amounting to Rs.33,622.990 million were billed by WAPDA to CPPA-G for the FY 2022-23. The amount was required to be recovered from CPPA-G but no amount was recovered during the year, therefore, interest amounting to Rs.4,911.554 million was required to be charged to CPPA-G which was not done. Similarly, an amount of Rs.10,614.472 million on account of interest on delayed payments pertaining to the invoices of NJHPC from July, 2019 to April, 2021 was recoverable from CPPA-G but no recovery was made so far.
Audit recommends the management to pursue the matter at appropriate level and ensure charging and recovery of interest on delayed payments from CPPA-G without further loss of time.
During audit of accounts of two formations of WAPDA for the period from July, 2022 to June, 2023, it was observed that an amount of Rs.10,312.230 million, out of invoices raised for sale of energy, was disallowed by CPPA-G. Non-adherence to the PPA resulted in non-finalization of disallowed invoices of Rs.10,312.230 million during the FY 2022-23. Audit recommends the management to pursue the matter with CPPA-G for early finalization and recovery of amount of disallowed invoices.
During audit of accounts of the CEO, NJHPC for the period from July, 2021 to June, 2023, it was observed that TRT of the project experienced damages and blockage that forced complete shutdown of the powerhouse on July 6, 2022. The contract for restoration works was awarded to M/s CGGC on August 25, 2022 with commencement date of August 27, 2022. As per contract, the stipulated completion period was 180 days (up to February 23, 2023) but the restoration work was much delayed. However, due to negligence/slow progress by the contractor, the restoration work could not be completed up till July 31, 2023 and the company sustained a generation loss of 2,944 million units (approx.) amounting toRs.26,843 million for which no responsibility was fixed. Audit recommends the management to inquire the matter at a higher level for fixing responsibility for delay in completion of work and generation loss.
During audit of accounts of the Project Director (PD), DHPP for the period from July, 2022 to June, 2023, it was observed that PC-I of the project was approved by the ECNEC on March 28, 2014 at a cost of Rs.486,093 million. Later on, a contract for relocation of Karakoram Highway (KKH)-01 was awarded to M/s China Civil Engineering Construction Corporation on March 16, 2015 at a contract price of Rs.14,538.852 million against PC-I provision of Rs.13,496.900 million with completion period of 564 days i.e. up to February 20, 2017. However, the construction of KKH-01, which was to be used as a bypass for diverted traffic of original KKH to avoid interference in the construction activities of the main works, couldn’t be completed till date. Meanwhile, the contract for civil works was awarded to M/s China Gezhouba Group Co. Ltd. (CGGC) at a contract price of Rs.115,003.461 million on March 08, 2017 with planned completion date of January 22, 2023. In order to avoid interference of open excavation work of KKH-01 with construction activities of the main work, avoid damages of main contractor’s camp and divert public traffic of the old KKH, a VO was issued for re-alignment of the relocated KKH-01 by including seven tunnels and three bridges costing Rs.29,413.545 million (equal to 202% of contract price).
Non-adherence to the PPRA Rules and instructions of Planning Commission resulted in unjustified increase in contract cost by changing scope of work through VO amounting to Rs.29,413.545 million up to the FY 2022-23.
Audit recommends the management to inquire the matter at a higher level for fixing of responsibility for award of an entirely redesigned work through a VO and that too at uncompetitive rates.
During audit of accounts of Neelum Jhelum Hydropower Company (NJHPC) for the period from July, 2021 to June, 2023, it was observed that a portion of Tailrace Tunnel (TRT) of the project was collapsed in July, 2022. The work for restoration of TRT was awarded to M/s CGGC (previous contractor) through negotiations. Scrutiny of the record revealed that the contractor submitted 1st quotation for remedial works on July 27, 2022 and after negotiations, rates of 47 items as compared to 1st quotation were increased before finalization of the contract. Due to subsequent increase in the rates of BOQ items, the company had to bear extra expenditure of Rs.1,176.082 million up to Interim Payment Certificate (IPC) No.10.
During audit of accounts of the PD, DHPP for the period from July, 2022 to June, 2023, it was observed that a contract No.MW-01 was awarded to M/s CGGC at a contract price of Rs.115,003.461 million. The contract was awarded on March 08, 2017 and notice to commence the work was issued on June 20, 2017. It was further observed that soon after award of contract, the consultants revised design of tunnels and out of total executed work of Rs.27,839.833 million, an amount of Rs.23,799.602 million was paid against nine VOs mainly relating to diversion works and provision of power supply whereas remaining amount of Rs.4,040.231 million was paid under different items of original contract.
Non-adherence to rules and guidelines resulted in improper planning leading to increase in contract cost amounting to Rs.23,799.602 million due to issuance of nine VOs up to the FY 2022-23.
