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Print Print 2019-12-11

Rs 10.795 billion loss noted: AGP calls for probe into Lakhra Power malfeasance

The Auditor General of Pakistan (AGP) has recommended that financial mismanagement and financial indiscipline of Lakhra Power Generation Company Limited (GENCO IV) causing Rs 10.795 billion loss as well as less power generation of Rs 76.610 billion needs
Published 11 Dec, 2019 12:00am

The Auditor General of Pakistan (AGP) has recommended that financial mismanagement and financial indiscipline of Lakhra Power Generation Company Limited (GENCO IV) causing Rs 10.795 billion loss as well as less power generation of Rs 76.610 billion needs to be investigated to fix the responsibility on the persons at fault.

The AGP in its special audit report on Lakhra Power Generation Company Limited (GENCO IV) for audit year 2017-18, tabled in the National Assembly Monday, pointed out that less power generation of 12,759 MK WH caused loss of Rs 76.610 billion. Malfunctioning of plant since its inception has been causing constant loss and has made the project unviable and measures should be taken to prevent further losses from the project.

The special report in its conclusion noted that Lakhra Power Generation Company suffered from design and maintenance issues since its inception in 1995, resulting in low power generation. Deteriorating power generation increased cost of generation which reached its highest level in 2012-13 at 1,943.82 paisa per KWH against PC-I cost of 159.75 paisa per KWH.

The company's accumulated losses from 2002 to 2017 have reached Rs 10,795.68 million and audit observed if the company is allowed to continue its operation, losses are expected to increase and will be a burden on the national exchequer. The dismal performance of the project due to non-achievement of its objectives has raised doubts on the company's ability to continue as a going concern.

The overall easement of the company in special report of AGP was that the project of 150 MW fluidized bed coal fired power station was installed at Lakhra during 1987-1995 at a capital cost of Rs 5,720 million. The project was undertaken to utilize the coal reserves available in the vicinity. The project was the first of its kind using indigenous coal as fuel and plant started its commercial operation in 1995-96 onward and soon after the operation it was observed that boilers and other heating system equipment were not designed on the coal available.

The requisite coal specification was also not available in Lakhra coal mines. Therefore, substandard coal was procured and utilized in the plant. Due to use of substandard coal, energy generation was 4576.701 MKWH units from 1995-95 to 2016-17 instead of 17,345 MKWH at 60 percent plant utilization factor. As a result of substandard coal, 12,768 MKWH were less generated. This state of affairs caused financial loss of Rs 76.610 billion at the average rate of Rs 6 KWH from the date of commercial operation of the plant till financial year 2016-17.

The audit paras of AGP included: (i) Rs 2,538.52 million loss due to consumption of heat rate in excess from the permissible limit fixed by NEPRA; (ii) de-rating of power house just after installation leading to wastage of half of the investment worth Rs 2,860 million; (iii) wrong designing of the project on incorrect specification leading to wasteful expenditure of Rs 1,908 million out of total investment of Rs 5,720 million; (iv) loss to the national exchequer to the tune of Rs 5.45 million due to non-submission of sales tax invoices by the contractor; (v) loss due to higher cost of generation Rs 16,234.82 million; (vi) financial loss of Rs 10,795 million due to poor operation and maintenance and Rs 16,234.82 million loss due to higher cost as well as Rs 905.14 million loss due to non-recovery of advances, and others.

Copyright Business Recorder, 2019

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