LAHORE: The Auditor General of Pakistan has raised serious concerns over Lesco after finding that the power company failed to follow its Circular Debt Management Plan. The report said this failure caused Lesco’s circular debt to rise sharply to Rs378.3 billion by the end of fiscal years 2022 and 2023.
The performance audit reviewed the financial years 2021-22 and 2022-23. It highlighted major gaps in planning and oversight by Lesco management.
According to the audit report, the Board of Directors of Lesco had issued clear instructions in its 235th meeting on July 15, 2021. The board asked management to prepare a complete strategy to reduce Aggregate Technical and Commercial losses. It also wanted urgent steps to control the increasing circular debt.
The board further directed the company to hold regular performance review meetings. These meetings were meant to assess operational, technical, commercial, and financial progress.
However, the audit found that Lesco management did not follow these orders. No proper review meetings were held during the period. The report said there were no effective policies made to reduce transmission losses or improve bill recoveries.
The auditors also pointed out weak oversight by the Board of Directors. They said there was no proper system to make sure board decisions were being carried out.
Because of these failures, Lesco’s circular debt increased from Rs307.3 billion in fiscal year 2021-22 to Rs378.3 billion in 2022-23. The audit blamed this rise on unpaid invoices and growing technical and commercial losses.
In response, Lesco management said the increase was due to transmission and distribution losses, along with lower bill recoveries. The company added that its request for a review of these losses was still pending before NEPRA’s Appellate Tribunal.
However, auditors rejected this explanation. They said Lesco had still failed to implement the Circular Debt Management Plan 2023.
The audit also revealed that the Departmental Accounts Committee had directed Lesco on February 15, 2024, to submit its annual business plan within 30 days. But the company did not provide the plan before the audit was completed.
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The Auditor General has now recommended that Lesco take immediate and practical steps to implement the Power Division’s Circular Debt Management Plan and update audit authorities on its progress.
