Civil Aviation Authority: AGP detects cases of malpractice, malfeasance in commercial activities

The Auditor General of Pakistan (AGP) has detected around Rs12,130.669 million non-transparent spending, losses and misappropriations in commercial activities of airports maintained by Civil Aviation Authority (CAA).

In its special audit report on commercial activities at airports "CAA and Aviation Division of the audit year 2016-17," presented before the National Assembly on Monday, the AGP asserted that the report which covers commercial activities from July 2010 to June 2016 aimed at not only the accountability process but also intended to carry out analysis of management decision by highlighting the weaknesses in the performance of the commercial activities and providing recommendations.

The auditors found non-transparent and lack of competition in tendering process for award of concession of Cargo Throughput valuing Rs6,357.444 million. The audit noted that CAA invited tenders for award of licenses for collection of Cargo Throughput (CTC) at Karachi, Lahore, Islamabad, Multan and Faisalabad airports for five years with 10 percent annual enhancement in license fee during subsequent years.

The auditors observed that at the time of tendering, a condition regarding relevant experience of collection of cargo throughput charges was included in the bidding documents, which was clearly a favor to the existing licensees. It further observed that due to this condition all other potential bidders were disqualified and all the existing licensees won and qualified the tenders.

The audit, while rejecting the CAA stance on the objection, recommended that the matter should be investigated and more competitive tendering be carried out in future.

The report also pointed out a lack of planning in land acquisition valuing Rs450.390 million for establishment of airport in Mansehra in the year 2014 and a piece of land measuring 787.625 acres was selected and the said amount was also paid. However, after notification of compulsory acquisition, the CAA informed the LAC that the land was not feasible and addition/deletion of 160 acres land is required. The AGP recommended to investigate the matter and action be taken against the persons responsible.

The auditors also detected no recovery of rent and space charges from licensees amounting Rs4684.678 million at airports including Karachi, Islamabad, Lahore, Peshawar and Multan.

The report also found loss to the authority due to encroachment on 309.62 acres of land by the encroachers and management of the CAA failed to evacuate the land from the encroachers - by Sindh police 120 acres from 1984 in Karachi airport, 9.27 acres by various parties in Islamabad airport, 178 acres by PHA in Lahore airport and 2.35 acres by ASF in Peshawar airport.

Additionally, the report found non-recovery of space charges on revised rates amounting Rs252.6 million from Shaheen Airport Services, loss of Rs185.043 million due to relaxation in land lease policy at new Islamabad airport, loss of Rs119.5 million due to concession on lesser rates and without tendering of passenger lounge for Emirates Airlines at Karachi airport on October 19, 2012, loss of Rs27.070 million due to incorrect enhancement in license fee to Gizelle Communication (Pvt) Ltd for five years from July 19, 2012 to July 18, 2017, loss of Rs23 million due to non-observance of policy and procedure in award of contract to Air Gate International at Karachi Airport October 2007 to July 2009, loss of Rs15.5 million due to mismanagement and improper decision, and loss of Rs14.4 million due to less recovery of rent from the licensee, Karachi Aero Club at Karachi airport.