In a recent revelation, Lahore Electric Supply Company (LESCO) faced a substantial setback, recording a staggering loss of Rs 2.23 billion.
The root cause?
Unraveling the Figures
1. Subsidy Claims and Financial Discrepancy
LESCO filed subsidy claims amounting to Rs 17.27 billion for the fiscal year 2021-22. However, the finance ministry approved only Rs15.04 billion, leading to a substantial gap in expected and received funds.
Unfortunately, the AGP report did not delve into the specifics of the rejection, leaving questions unanswered.
2. Compliance Issues and Governance Rules
The audit report attributed the loss to non-compliance with the Public Sector Companies (Corporate Governance) Rules. These rules mandate boards of directors to establish robust internal control systems, ensuring probity, propriety, objectivity, integrity, and honesty.
The lack of adherence to these governance principles has evidently cost LESCO dearly.
Understanding the Rejection
1. Lack of Disclosure and Investigation
The reasons behind the rejection of subsidy claims were not disclosed or investigated, leaving room for speculation.
This lack of transparency has further compounded the challenges faced by LESCO, underscoring the need for a more thorough and accountable process.
2. Management Response and Discrepancies
LESCO, in response to the discrepancy, cited two primary factors. Firstly, a variance in the calculation of fuel price adjustment on subsidy claims, and secondly, a failure to receive notification from the government regarding concessionary tariffs for eligible customers of Sundar Industrial Estate.
The company asserted it followed instructions from the Power Information Technology Company, a state-owned entity providing IT solutions to the power sector.
1. Inadequacies in Industrial Support Package Implementation
Apart from the subsidy rejection, the AGP report uncovered another financial setback. The Gujranwala Electric Power Company (GEPCO) faced a loss of Rs 244.25 million due to the non-reflection of the financial impact of credit adjustments on industrial consumers benefiting from the industrial support package.
2. Implementation of DAC Recommendations
The Departmental Accounts Committee (DAC) directed GEPCO’s management to verify records from the audit, emphasizing the importance of implementing DAC’s decision.
The report underscored that the financial benefits availed through the Industrial Support package-2 were not reclaimed from consumers who received credit adjustment notes based on excess billing.
In conclusion, LESCO and GEPCO grapple with significant financial setbacks, emphasizing the critical need for transparent processes, governance adherence, and efficient implementation of subsidy programs.
Addressing these challenges head-on will be pivotal in ensuring the financial health and sustainability of power companies in the region.