AGP audit report exposes Rs4.5 trillion losses in Pakistan’s power sector

WEB DESK: The Auditor General of Pakistan (AGP) has uncovered widespread financial mismanagement and losses amounting to Rs4.5 trillion in the country’s power sector, further exacerbating the ongoing energy crisis.

According to Dawn, the AGP’s audit report for 2023-24 on the Power Division and its associated organisations, spanning 442 pages, highlighted severe issues such as non-recoveries, overpayments, poor financial and asset management, embezzlement, theft, fraud, and over-billing.

A major concern raised in the report was the Central Power Purchasing Agency’s (CPPA) failure to recover Rs2.53 trillion from distribution companies (Discos), including K-Electric, for the sale of energy.

This financial shortfall has placed immense pressure on the power sector, leading to delayed payments to power producers and resulting in hefty late payment surcharges. The AGP emphasised that if these funds had been recovered, the liquidity crisis could have been mitigated, potentially reducing the circular debt and associated surcharges.

The audit also revealed that Rs877.6 billion remains unrecovered from energy defaulters, both in the government and private sectors, due to the non-enforcement of commercial policies and collection procedures. Despite these significant outstanding amounts, management has made little effort to expedite recoveries, further compounding the financial challenges faced by the sector.

Additionally, the report noted that power generation plants operated by the National Power Parks Management Company Ltd (NPPMCL) generated over 41,000 GWh between 2020-2023, with a portion of this energy produced using expensive High-Speed Diesel (HSD) due to the unavailability of Regasified Liquefied Natural Gas (RLNG). This resulted in an extra burden of Rs61.97 billion on consumers.

The AGP also identified Rs196 billion in losses caused by distribution companies exceeding the system loss targets set by the regulator, Nepra.

These losses, passed on to consumers through tariffs, represent a significant drain on resources, with 11,609 million energy units lost due to non-compliance with regulatory targets in 2022-23. The AGP’s findings underscore the urgent need for accountability and reform in Pakistan’s power sector to prevent further financial deterioration.

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