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Corruption rampant in water and power ministry, says PAC

The Public Accounts Committee (PAC) on Wednesday expressed disappointment over the financial state of affairs of the Ministry of Water and Power which, it said, had failed to recover billions of rupees from the pockets of corrupt officials and contractors.

The PAC regretted that the ministry had even failed to take disciplinary action against officials found guilty of corrupt practices.The committee meeting, presided over by its chairman Nadeem Afzal Chan, on Wednesday took up the audit paras related to the Ministry of Water and Power. The meeting was informed that the ministry had failed to take action against the power defaulters and loss of meters and other material. The distribution companies failed to recover their dues and in one recover their dues and in one case their lawyers did not appear to plead the cases in the courts. Resultantly the decision went in favour of the accused persons.

The Chief executive of Peshawar Electric Supply Corporation (Pesco) was asked whether the corporation blacklisted the lawyer who did not appear before the court to plead the case or if any complaint was sent to the Supreme Court Bar Association against the lawyer. The Pesco chief expressed his ignorance about the issue. He did not even know the name of the lawyer. The PAC objected to the attitude of the Pesco chief, a retired brigadier, who replied harshly to the critical questions of the PAC members.

The PAC members also objected to his orders that feeders where recovery is less than 10 percent should not be provided electricity.PAC member Noor Alam Khan told him that he did not have the authority to block power supply to feeders. “Why should the people suffer because of the inefficiency of the distribution companies?” he said.

The Pesco chief told the committee that line losses of Pesco are 37 percent and its recovery rate is 80 percent.Meanwhile, the PAC has referred the scam in the Alternative Energy Board to the FIA with directives to hold criminal and financial investigations in this case and submit the report within seven days. Millions of rupees were siphoned off while converting bank guarantees into performance guarantees.

The Alternative Energy Board in its report held former MD Air Marshal (Retd) Shahid Hamid and Brig (Retd) Naseem A Khan responsible for the scam. Audit officials told PAC that the unauthorised payment of Rs6.339 million was made to three companies M/s PERC, M/s AA Enterprises and M/s Cameos. M/s CAMESO was hired as consultant on June 12, 2007 for feasibility study for Solar Water Pumping Project but the work was not done.

Another contract was given to PERC Power Company on June 14, 2006 for Solar Thermal Power project, but when irregularities were detected, an initial inquiry was made and later the case was referred to FIA on 01-11-2010 on the advice of Law Division but the case is still at the level of investigation.

The report stated that the contract with PERC Power Company stated that machinery was to be supplied by October 17, 2010 and in this regard advance payment of Rs11.43 million was provided in the contract without any bank guarantee.

According to the inquiry report dated 09-5-2009, bidding documents provided that advance payment will be on the basis of a bank guarantee but this clause was not included in the contract and even bid security at the rate of 2 percent was not obtained.

The committee was told that although 100 percent payment plus 15 percent escalation was made, the work was not completed and no penalty was imposed on the company. No action was taken against persons held responsible in the inquiry report and only the matter of insurance guarantee of the firm was referred to the FIA on November 1, 2010 after failure of encashment.

In similar case a contract dated 22-04-2006 was signed with M/s AA Enterprises for Rs2.52 million with 30-9-2006 as the date of completion. Two bank guarantees of Rs2.502 million were obtained but later replaced with performance guarantees. The department informed the PAC that inquiry had been completed in two cases and one case has been referred to FIA.

While audit officials said that AEDB should initiate appropriate action against those responsible for the loss and irregularities.In another case, PAC was informed that the Central Power Company (GENCO-II) Guddu, failed to recover rent and electricity dues worth Rs6.153 million since 2004-05.

PAC was informed that till now only Rs1.99 million as electricity charges were recovered while 58 houses were vacated from illegal occupants including employees of the provincial government.

Meanwhile, secretary water and power Zafar Mehmood told the committee that under an agreement in 2009, KESC was being provided 650 MW of electricity from the national grid.PAC member Khuram Dastgir asked whether the secretary could confirm that the KESC was the single largest defaulter and how much subsidy was given to it. The secretary replied that KESC was being provided 650 MW and the finance ministry and KESC made the book adjustments.

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