ISLAMABAD: The Auditor General of Pakistan (AGP) has told the new Pakistan Tehreek-e-Insaf (PTI) government that the previous Pakistan Muslim League-Nawaz (PML-N) administration had made illegal payment of Rs72 billion to power producers in an attempt to wipe out the circular debt.
After coming to power in June 2013, the PML-N government paid Rs480 billion to the power producers without any pre-audit in a bid to clear the circular debt immediately. However, of the total payment, according to the AGP, Rs72 billion was given illegally to the power producers.
Now, the PTI government has decided to examine the issue thoroughly and settle the AGP observations.
The Economic Coordination Committee (ECC), in its recent meeting, also took up the matter, noting that it required a comprehensive examination.
The committee directed the power minister to hold a meeting with the attorney general of Pakistan as well as the AGP in order to assess the auditor general’s report and submit viable recommendations for settlement of the audit paras.
During the ECC meeting, the Power Division recalled that the Public Accounts Committee had discussed the report and it was also taken up in a huddle of the Senate Standing Committee on Finance and Privatisation in 2017. The committee referred the report to NAB for further inquiry.
The meeting was told that the sub-committee on circular debt had termed unlawful the non-adjustment of liquidity damages by the Ministry of Water and Power against claims of independent power producers (IPPs) amounting to Rs22.91 billion.
It emphasised that such payment should have been adjusted instead of being set aside prior to clearing the circular debt.
The sub-committee observed that payments for idle capacity amounting to Rs32 billion without taking energy supplies from power plants were totally inadmissible, unjustified and unlawful. It recommended that appropriate action must be taken against the responsible officers and the paid amount should be recovered from the recipients.
Meeting participants were informed that the audit had pointed to unjustified payment of Rs18 billion on account of general sales tax.
Sales tax was a pass-through item as per power purchase agreements and pass-through items were payable by the power purchaser to the company on the basis of actual cost reasonably incurred by the company, it said.
Contrary to that, the reimbursement of Rs17 billion to the IPPs and Rs761 million to the Water and Power Development Authority (Wapda) and nuclear power plants on account of general sales tax was made without supporting documentary evidence including paid challans.
Published in The Express Tribune, September 29th, 2018.