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AGP Audit Finds Rs. 60 billion Irregularities in Various NHA Projects

The Auditor General of Pakistan (AGP) has found irregularities worth around Rs. 60 billion in the various road projects of the National Highways Authority (NHA), including projects initiated under the China-Pakistan Economic Corridor (CPEC).

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The report on NHA’s accounts for the audit year 2020-2021 found 68 cases amounting up to around Rs. 60 billion, where irregularities, payment of foreign currency without required proof, irregular award of contracts, violations of the Public Procurement Regulatory Authority (PPRA) rules, and unauthorized expenditures were observed.


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The report pointed out the non-realization of revenue amounting to Rs. 14.12 billion from contractors. It stated that the latest audited financial statements available for the year 2018-19 indicated that receivables from M/s FWO have increased from Rs. 5.179 billion to Rs. 7.43 billion.

A similar situation was observed in the case of M/s National Logistic Cell (NLC), whose dues increased from Rs. 418 million to Rs. 1.637 billion up to June 2019, which reflects weak enforcement of internal controls.

Further non-execution of the project as per provisions of contract agreement created overheads of Rs. 10.334 billion. Non-imposition of liquidated damages for delay in completion of works resulted in irregularities of Rs. 9.039 billion.

Unauthorized payment for the foreign currency component caused Rs 3.036 billion.

Package IIB (Jamani-Shorkot 31 km) and package III-A (Sahorot-Dinpur 31 km) of the project “Construction of motorway M-4″ was awarded to M/s China Railway First Group Company Limited, at the cost of Rs. 8.828 billion and M/s China Gezhouba Group Co. Ltd and M/s Ghulam Rasool and Co. (Pvt) Ltd Joint Venture at the cost of Rs. 11.22 billion on November 16, 2016, and August 5, 2016, respectively. Package III-B (Dinpur-Shamkot 34 km) was awarded to M/s Xingjiang Biexin Road and Bridge Group Co. Ltd, at the cost of Rs. 10.82 billion on August 5, 2016.

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Audit observed that contractors were paid IPCs with the agreed percentage of FC component, but proof for expenditure incurred in US dollars was not obtained from the contractors. Payment without proof was made due to non-observance of contract provision and weak financial controls.

It observed that NHA irregularly awarded additional work without feasibility study approval and tender worth Rs. 2.58 billion.


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The report observed decreasing trend in revenue realization to the tune of Rs 2.089 billion. The revenue of NHA grew by 18.89 percent in 2015-16, increased by 3.71 percent in 2016-17, went up by 20.12 percent in 2017-18, and soared by 10.94 percent in 2019-20.

Toll collection amounting to the tune of Rs. 25.573 billion in 2019-20 include revenue of Rs. 2.965 billion for the added network of M3, M4, and M5, leaving actual collection amounting to Rs. 22.608 billion. Thus, the Authority was confronting a potential decline in the revenue.

The report observed loss due to delay in completion of the project to the tune of Rs. 1.938 billion. Further unjustified delay caused overruns of Rs. 1.206 billion. Award of works to ineligible contractors caused losses of Rs. 1.02 billion.

The report unearthed that NHA awarded a contract for “Construction of Peshawar-Karachi Motorway section-II Multan-Sukkur section (392 km) CPEC,” to M/s China State Construction Engineering Corporation Limited on Engineering procurement construction (EPC)/Turnkey basis for an agreement cost of Rs. 294.35 billion.

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Audit observed that 51 cm aggregate-based course was laid over the shoulder of both sides instead of 56 cm provided in the preliminary design and schedule of prices, in view of the above differential cost was required to be deducted to credit the saving to the Employer’s account, which was not done and full payment was allowed.

N-n-deduction of differential cost occurred due to weak contract administration. This resulted in an overpayment of Rs. 576 million.

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