Irregularities detected in KP hydel funds during Audit

AG report on the accounts of the KP Public Sector Enterprises (PSEs) for the year 2015-16 by the Auditor General of Pakistan (AGP) has detected irregularities in the release of funds of over Rs 16.317 billion from the Hydel Development Fund (HDF) of Khyber Pakhtunkhwa.

The Hydel Development Fund was established by the KP government in 1992 with the initial allocation of Rs 150 million. The objective of the fund was to develop Hydel Electricity in Khyber Pakhtunkhwa. The provincial government had contributed Rs 14.553 billion as equity in the fund up to June 30, 2013. On June 30, 2013, the total size of the fund was Rs 23.302 billion. A board was also constituted under the chairmanship of Chief Minister Khyber Pakhtunkhwa with Ministers for Finance, Irrigation & Power, Chief Secretary, Additional Chief Secretary, Secretary Finance, Secretary Energy & Power and others. The management of the fund failed to provide Annual Audit Accounts for the years 1992-93 to 2014-15 by December 31, 2015. The Public Accounts Committee (PAC) meeting in respect of Finance Department, government of Khyber Pakhtunkhwa has not been convened since 2004-05.

During the course of audit, the auditors detected irregular release of a huge amount of Rs 11.068 billion to Pakhtunkhwa Energy Development Organization (PEDO) without any work plan in violation of the Rule 7 (1) of the fund Rules 2003. Evaluation of projects was not carried out by the fund before release of funds. The audit also detected the irregularity in awarding contracts worth Rs.4.247 billion in violation of General Financial Rules (GFR) Khyber Pakhtunkhwa.

Another important irregularity was in the KOTO Hydropower Project (31.17MW) District Lower Dir. The Administrative approval of Rs 8,814.63 million for the project was given on September 30, 2013, while the work was awarded to M/s Sichuan Sarwar-Sillan Changquing Luyang JV Islamabad for Rs 12,599 million. Similarly the scheme for construction of Jabori Hydropower Project (6.5MW) District Mansehra was approved by the Provincial Development Working Party (PDWP) with capital cost of Rs 2,323 million. The work was awarded to M/s CRC JV Multan for Rs 2,786.25 million. The award of works at excessive cost as against the PC-1 and administrative approvals puts the provincial government into excessive cost worth Rs.4,247.62 million (i.e Rs.3,784.37 million+Rs.463.25 million).