Audit points out Rs1,610b irregularities in CPPA accounts

ISLAMABAD: The Auditor General office has reported massive irregularities to the tune of over Rs1,610 billion during 2017-18 in accounts of Central Power Purchasing Agency (CPPA), an entity owned by government dealing with the National Transmission and Dispatch Company (NTDC) pertaining to the market operations and presently functioning as the market operator.

A copy of the audit report available with The News showed that the profit and loss and balance sheet of the CPPA for financial year 2017-18 could not be finalised by the management till end of 2018. Details of the report revealed that irregularities worth Rs1,142 billion were pointed related non-recovery of sale of energy, mark-up and market fees from distribution companies (Discos).Non-recovery of such huge amount contributed adversely on the company’s financial position for payment to IPPs and ultimately piling up to circular debt for which the CPPA had to obtain loans from the PHPL. The matter was taken up with management in May 2018 and reported to the ministry in November 2018, and the management replied that the CPPA was pursuing constantly for recovery of receivables from Discos, the report pointed out.

Irregularities of Rs147 billion have been reported on unjustified acquisition of loans and imposition of surcharge to consumers. The report stated that according to Nepra Act 2018, the Authority shall protect interest of consumers and companies by providing electric power services in accordance with the principles of transparency and impartiality. The audit report pointed out that substantial portion of the payment of Rs842.9 billion was directly received from Discos, whereas the remaining amount of Rs147.4 billion was managed as loan from the PHPL in the shape of three separate financing facilities from banks. The government has to pay Rs80 billion as interest and remaining principal amount would be managed by imposition of surcharge at Re0.70kwh from consumers through items in tariff, which was not justified. The audit suggested that the Ministry of Energy needs to investigate the matter of fixing responsibility regarding unjustified acquisition of loan and imposition of surcharge to consumers, the report stated.

Similarly, irregularities of Rs138 billion were reported due to non-recovery of mark-up on delayed payments from Discos and K-electric. Another Rs53 billion irregularities have been pointed out on pretext of irregular payment to IPPs without following standard policy. The audit also observed that Rs42.4 billion irregularities due to non-settlement of loan note receivable from the NTDC.

This is not all. The report reads that Rs39 billion loss occurred due to non-adjustment of advances given to Gencos and IPPs. Again Rs34 billion irregularities were pointed out in unjustified payments for idle capacity of power plants. A loss of Rs14.5 billion was incurred due to compensation claimed by the IPPs on account of transmission line tripping and Rs23 billion were lost due to non-invoicing of claims regarding saving of working capital by the IPPs and unauthentic payment to Hubco on account of unaudited O&M cost.

Some paras of the report pointed out that Rs9.6 billion were lost due to payment of interest on delayed payments to IPPs and recoverable overpayment along with interest on account of fixed component from sugar mills.

When contacted, spokesperson for the Energy Ministry said the report was discussed in the sub-committee of the Public Accounts Committee headed by MNA Naveed Qamar and the committee criticised this report. He said that now the report will be submitted to PAC, which is proper forum to decide its merit. He said the Securities and Exchange Commission of Pakistan (SECP) had also conducted commercial audit of this CPPA which didn’t point out such irregularities.