Sharifs’ good governance: Finance Ministry paid Rs 480 b to IPPs without audit

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Lahore: Pakistan is an energy deprived country, a well-known fact. But successive governments’ failures, bad governance and corruption never let the people get rid of this menace, and they do not know that the PML-N Government had paid their Rs 480 billion to power companies without any audit and proper documentation, documents available with News Lens Pakistan revealed.

The draft of an audit report prepared by former Auditor General of Pakistan (AGP) Buland Akhtar Rana in 2014 raised the objection over absence of Standard Operating Procedures (SOPs) for the payment of Independent Power Producers (IPPs) and oil companies such as Pakistan State Oil (PSO). The draft report sheds light on some shocking details which point out alleged irregularities in the payments to Independent Power Producers (IPPs).

The draft report reveals the government, defying the PPRA (Public Procurement Regularity Authority) rules, had made payment of Rs 480 billion to the IPPs from the State Bank of Pakistan (SBP) without any audit.

Former Accountant General of Pakistan Revenue (AGPR) Tahir Mehmood, who played an important role in drafting the report, told News Lens Pakistan that huge payments were made on photocopies sent by IPPs on expenditures, extra surcharge and dues.

“The IPPs were paid Rs 190 billion extra in the form of penalty while Rs 18 billion were paid to them on mere bogus photocopies sent by the IPPs,” he noted.

Mehmood said that he took up the issue of massive irregularities with Finance Minister Ishaq Dar in June 2013. “The finance minister promised to look into the matter after budget but he never got back on such a big scam,” he added. “Later, the SBP was advised to release Rs 480 billion to the IPPs from the Federal Consolidated Fund.”

He said that under the CJ Ordinance 5B, the AGPR was the authority to apply pre-audit on all checks for such payments.

“I wrote a letter to Ashraf Wathra the then Governor of SBP, citing that payments could not be made from the Federal Consolidated Fund unless they are pre-audited by the AGPR,” Mehmood said, adding that the Governor SBP sought a clarification from then Auditor General of Pakistan, Buland Akhtar Rana, who, in fact, endorsed my concerns and action. Later, the auditor general ordered a detailed audit of the payments made to the IPPs from the SBP.

Mehmood further revealed that all payments were made with the consent of Finance Minister Ishaq Dar and with the connivance of Assad Ameen who is the now the current Auditor General of Pakistan.

It has also been noticed that clear violations of certain clauses of the contract with the IPPs were committed. Under the contract, the IPPs were to be paid in 28 days and any delay would invoke the penalty clause.

Mehmood regretted that the Finance Ministry willfully delayed the payments to invoke the penalty clause. However, the penalty to IPPs invoked due to interrupted power supply was waived off, he added.

“The government waived off Rs 22.9 billion of liquidated damages incurred by the IPPs,” he averred. “Instead of recovering nearly Rs 23 billion from IPPs for interrupted power supply, the IPPs were paid 32 billion under the pretext of delayed payments,” he noted.

When contacted, the former auditor general of Pakistan, Buland Akhtar Rana, he said he was removed from the office for pointing out these massive irregularities. “I took up the issue with the Public Accounts Committee but instead of appreciating my efforts to raise irregularities of billions of rupees which caused huge loss to the national exchequer, I was snubbed by PAC Chairman Khurshid Shah,” he disclosed in an interview with News Lens Pakistan.

“I was removed from the office only because all accused departments were aware of the fact that I would not withhold the report at any cost,” he noted.

Endorsing Rana’s claim, the former Public Accounts Committee (PAC) Chairman, Nadeem Afzal Chan, admitted that the Pakistan Peoples’ Party was involved in the removal of the former AGP Rana because it would have opened many cases of irregularities committed by the former PPP government.

It was in May, 2015 when a notification was issued by the Finance Ministry which stated that in accordance with the Supreme Judicial Council’s report, Rana had committed misconduct on several occasions and therefore had been removed from the office of auditor general.

Rana’s removal was seen as controversial since it came at a time when the Public Accounts Committee was set to take up the government’s audit reports involving alleged financial irregularities and embezzlement of billions of rupees.

On October 22, 2015, the incumbent Auditor General of Pakistan Assad Ameen issued a letter stating that he would himself present the draft report in the PAC meeting.

AGP Assad Ameen admitted the existence of such draft report but claimed that all praras regarding the payments of Rs 480 billion to IPPs were already audited.

The letter read that paras of the Rs 480 billion payments have been deleted because they were already audited and some more paras were settled down. Meanwhile, it was also promised in the letter that the draft report would be taken up with the PAC.

However, Rana, out rightly rejected the Ameen’s claim that Rs 480 billion payments were already audited. “Absolutely not, I can say this with good authority that no audit was conducted on Rs 480 billion payments to IPPs,” he maintained.

Senior Analyst Amir Mateen told News Lens Pakistan that the Finance Ministry in connivance with the Water & Power Ministry made these massive irregularities. “Article 6 may be invoked against Finance Minister Ishaq Dar as it amounts to treason.

Mateen claimed the government benefitted IPPs and oil companies to end the circular debt and strengthen its position.

“Observation is always the starter. It then goes to Dubious Account Committee (DAC) where both sides, the audit party and convened department sit on the table and discuss each para,” Mateen said, adding that the draft was never discussed in the DAC which if finds legal requirements forwards the case to the Public Accounts Committee.

The Water and Power Ministry spokesman avoided commenting on the issue, saying the para of payments has already been audited and the matter was closed now.

Mateen says interestingly, there is an obvious conflict of interest. How can the current Auditor General be impartial in presenting the report when he himself was involved in this biggest scam as he was the advisor to the Finance Ministry at that time?

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