Embezzlement of Rs350m: Pepco initiates probe against Iesco officials

ISLAMABAD: Pakistan Electric Power Company (Private) Limited (Pepco) has initiated an inquiry against officials of the Islamabad Electric Supply Company (Iesco) who have been nominated in an internal inspection report for being committing embezzlements of Rs350 million.

The inspection team has pinpointed that those employees had made budged payments in award of two dozen contracts to favourite contractors. Those contractors have also used substandard materials and went against the norms of the Iesco’s laid down rules. This resulted around Rs350 million losses to this state-run power distribution company.

The inspection also held project director Iesco along with five other officials responsible for this scam. Project director along with other officials were electrical engineers, but they were dealing with civil work and had caused loss of multimillion rupees to the company by benefitting the contractors by making overpayment.

The inspection also noted that the company had suffered a loss of Rs128 million in installing poor quality pipes in one metro bus project. The company has suffered a loss of Rs222 million in other 23 contracts in which project director had favoured contractors to use poor quality material.

According to the inspection report available with The News, it has observed that general manager had recommended using higher quality of pipes but project director in collusion with contractors used every poor quality of PVC pipes.

The auditors had concluded during the audit that embezzled amount should be recovered from the contractors and responsibility should be fixed on the officials involved in this scam. It has found that an amount of Rs53.9 million had been embezzled due to unnecessary expenditure on construction of duct line.

The auditors had noticed that contractors had received a very excessive amount against removal and rerouting of electric cables from the route of metro bus project to consumer in the same budget.

They further noticed that it was spent very lavishly through contracts unwisely. Audit was of the view that shifting of feeders from overhead to underground was not consideration but utilisation of the amount by constructing a big size duct line was a primarily goal which was against the government and Iesco spirit. The audit recommended investigating through an inquiry committee to fix the responsibility besides making recovery of amount under intimation to audit.

In another case, an excessive amount of Rs21.33 million was paid to contractor and site had not been checked by SDO, XEN and project director.

The audit had also observed another excessive payment of Rs16.39 million to the contractors. An official said that project director was appointed in February 2014 but he was still holding the charge against the policy of the company to transfer the official from the post after every three years.

Audit has observed that initiation of over payment has always been designed in construction division by making unrealistic, non-technical, unsketched, overestimated preparation of bill of quality. Audit observed that audit could not find a single set of estimate work order, contractors’ bill which is matched with each other even allowing 10 to 15 percent margin of variation. Therefore, audit was of the view that all technical sanctions and administrative approvals based upon such unrealistic, non-technical, excessive amount work estimate are wrong.