Islamabad - Auditor General of Pakistan has pointed out irregularities of around Rs300 million in hiring consultants for the Kishanganga Hydroelectric Plant by the Pakistan Commission for Indus Water (PCIW) and has recommended an inquiry into the matter.

A special audit report by AGP observed that Pakistan Commission for Indus Water (PCIW) incurred an amount of Rs62.695 million on hiring the service of the consultants for Kishanganga Hydroelectric Plant (KGHEP) on Kishanganga River which was over and above the amount approved by the prime minister of Pakistan.

The prime minister, through a summary issued on 7 December, 2005, had approved the rates for payment to consultants on account of hiring the services of legal consultants (international/local). For two international legal consultants 450 UK pound and 250 US dollar rate per hour, respectively, was approved by the PM. For the local consultant Rs 2000 per hour rate was approved.

According to the audit report, payment of legal fee to the consultants was made over and above the approved rates/fixed by the PM. Scope and hours served by each job was not available on record, and payment to one legal consultant was made without open competition. Invoices of legal consultants were received without mentioning the job hours.

The management replied that the payment was ratified in accordance with the modified agreement signed with NESPAK. The bills of Mr.Vaughan Lowe were accepted as they were in line with the rates as were charged by the other legal consultant of similar calibre. The input of Vaughan Lowe is covered under the modified agreement with NESPAK which was approved by the Ministry of Water and Power and duly vetted by Law, Justice and Human Rights Division and Finance Division.

However, the reply was not accepted by the auditor general saying that “the payment of legal fee to the consultants was made over and above the rates approved by the prime minister of Pakistan and without a proper mechanism.”

The modified agreement dated April 6, 2012 with M/s NESPAK was made by the management of SAPM who were not competent, said the audit report.

Irregular modification in the contract price was made with M/s NESPAK on account of consultancy services and non-transparent payment Rs 210.696 million. PCIW hired M/s NESPAK for providing consultancy services relating to Kishanganga Hydroelectric Plant and signed a contract agreement on 13 June 2008. The agreement was modified on 4th June 2012 and the contract price was revised.

The audit observed that the contract was modified without obtaining the approval of the prime minister and contract prices were modified without justification. Similarly Rs46.5837 and Rs8.353 million were paid in excess to NESPAK on account of hiring the services of foreign and local consultants respectively even stated as in the modified contract prices. PCIW paid Rs210.696 million to M/S NESPAK as against the modified contract price of Rs159.102 million. A claim of Rs52.487 million of NESPAK is still pending with PCIW. NESPAK made several contracts with local as well as the international consultants without open competition and without signing contract agreement. Thus all the payments made to consultants (local and international) were doubtful, said the audit report. PCIW released a number of amounts as advance to NESPAK without provision in the agreement.

The management replied that the modification of the contract was approved by the Ministry of Water and Power and vetted by Law & Justice Division, as was conveyed by the special assistant to prime minister on water resources and agriculture. Similarly, the amount to NESPAK was released to avoid surrendering of the funds at the end of the financial year, as the funds were direly needed for pursuance of the court case on Kishanganga. It was also informed that the foreign visits and meetings in case of Kishanganga Hydroelectric Plants were always convened on short notices, it was not possible to get the funds approved for these visits within the required timeframe. The payments to the legal consultants by NESPAK were made as per their contracts covered under the modified agreement of services within NESPAK.

The auditor general said that the management had accepted the irregularity. The auditor recommended that matter might be inquired and responsibility should be fixed for payments made to NESPAK despite deficiencies.

Irregular hiring of services of consulting firms were made without competitive rate costing Rs9.406m. Similarly doubtful payments of Rs23.555m were made to M/S NESPAK. The audit observed the unauthorised opening of bank account without prior approval of Finance Division and issuance of cheques of Rs10 million. Irregular and unjustified payment of Rs1.382m on rental charges of helicopter was also observed by the audit.

The balance amount of 0.111 million Euro remitted by the court of arbitration was not deposited.

Despite several reminders the minutes of the DAC were not shared with the AGP office. Audit recommended that an inquiry should be conducted and responsibility be fixed for the payments made in term of legal fee to the consultants and appointment of one of the consultants without open bidding should also be inquired.

Audit recommended an inquiry into the matter and fixing of responsibility.