ISLAMABAD: The Auditor General of Pakistan (AGP) has uncovered severe inefficiencies, malfeasance, and losses totaling Rs4.5 trillion in the country’s ailing power sector, pushing the nation towards financial collapse.
The AGP’s audit report, the most extensive among federal government entities at 442 pages, highlights widespread issues including non-recoveries, over-payments, asset mismanagement, embezzlement, theft, fraud, and over-billing.
The report reveals that the Central Power Purchasing Agency (CPPA), which acts as a financial agent for power companies, failed to report monthly on any distribution company’s (Disco) failure to recover bills. The audit found Rs2.53 trillion receivable from Discos, including K-Electric, due to uncollected energy sales. This financial blockage has led to delays in payments to producers and incurred late payment surcharges ranging from KIBOR + 2% to KIBOR + 4%.
The AGP report notes that the power sector’s liquidity crisis could have been alleviated if these funds had been recovered, thereby reducing the circular debt and associated surcharges. The audit also reported Rs877.596 billion in unrecovered payments from defaulters, with inadequate efforts made by managements to expedite recovery.
Furthermore, the audit revealed inefficiencies in power generation, including the use of costly fuel, which led to an extra cost of Rs61.97 billion for consumers. Discos caused an additional Rs196 billion in losses due to exceeding regulatory targets for system losses, with actual energy losses surpassing set limits by Nepra.
The report underscores the absence of accountability and resistance to necessary reforms, stressing the need for improved financial management and adherence to regulatory standards in the power sector.
