AGP reports over payments in Lahore Metro Bus project

LAHORE: The Auditor General of Pakistan has unearthed overpayments and losses of millions of rupees in the construction of the Lahore Metro Bus project that was completed in February 2013.

The audit report made available to The Express Tribune shows overpayments of Rs318.68 million, including Rs86.32 million on account of the extra labour rate of pre-mixed carpeting; Rs72.09 million on inadmissible pre-heating charges; Rs39.84 million due to inadmissible payment of surface rendering and finishing; Rs32.11 million for non-deduction cost of less used bitumen.



Moreover, the report says Rs28.97 million extra payment was made to contractors on account of higher rates than admissible under the revised estimate; Rs20.05 million due to non-deduction of rebate offered by the contractor; Rs15.42 million extra amount was paid due to the provision of higher rates of service tax; Rs12.23 million overpayment was made due to the application of the incorrect loose factor; Rs10.76 million due to higher rates of carriage than the schedule rate; and Rs0.86 million were wasted by paying undue financial benefit to the contractor.

The report also finds irregularities to the tune of Rs1.55 billion in the procurement and contract management because the government did not get approval from Ecnec (the Executive Committee of the National Economic Council).

The audit findings show irregular execution of the project. It finds non-production of the record for Rs976.65 million and Rs317.88 million overpayments due to the incorrect rate analysis.



In addition, Rs163.59 million were paid in irregular procurement and non-reduction in the rate of below-specification escalators; Rs46.01 million loss was incurred on the provision of import duties and taxes on local items; noncompliance of the chief minister’s maintenance period for Rs38.08 million; and Rs9.49 million for non-recovery of occupancy cost of the office approval.

It also finds Rs121.45 million overpayments and losses in the construction and works, including Rs41.10 million due to incorrect RCC rates; Rs35.28 million due to the non-utilisation of retrieved material; Rs23.39 million on account of incorrect labour rates; Rs16.32 million due to incorrect rate of paint; Rs4.08 million due to extra overheads in the rate analysis; and Rs1.28 million were lost due to higher rates in technical sanctioned estimate than PC-1.

The Directorate General Audit Works (provincial), Lahore, conducted the audit of the project: “Construction of Metro Bus Transit System for Ferozepur Road (Corridor-I), Lahore”, during May 2013.

The report points out: “The government did not carry out the initial Environmental Examination and Environmental Impact Assessment as required under the Pakistan Environmental Protection Act-1997, despite its provision in the PC-1.”



“During construction work, the contractors used parks at various places under the Parks and Horticulture Authority for the construction of girders and slabs and dumping material having an adverse impact on the environment,” the report states.

“The government neither prepared the PC-IV project evaluation nor conducted audit of the project, hence the socioeconomic benefits could not be evaluated,” it added.

The report indicates that irregularities were mostly due either to weak technical, supervisory and financial controls or poor contract management.

The report suggests that the amount paid to contractors on account of taxes, not applicable or paid in excess, should be recovered from them.

It also recommends disciplinary action against officers on account of non-production of record to audit and necessary directions should be issued in this regard.

The scheme was funded in April 2012 by the provincial government with an approved PC-1 cost of Rs30,824.79 million and the completion period of one year.

In light of Rule 8 of the second schedule of the Delegation of Financial Powers Rules, 2006, Ecnec is the final approving authority for any provincial project costing more than Rs10,000 million.

However, this project, which otherwise required Ecnec approval, was split into nine packages (I to IX) and each package was got approved separately from the PDWP to avoid approval from Ecnec.

The project was completed in 11 months in February 2013 with the total expenditure of Rs29.896 billion (including the cost of land, Rs26.620 billion; construction cost, Rs23.617 billion; and other costs, Rs 3.617 billion) against the revised PC-1 cost of Rs30.564 billion.

Published in The Express Tribune, January 28^th, 2017.