NHA's Rs226bn Irregularities: Unacquired Land, Missing Calcs, Unfinalized Accounts

Auditor General of Pakistan finds Rs226.57 billion financial irregularities in National Highways Authority (NHA)

Islamabad, Pakistan - [ [Date] ]: The latest audit report from the Auditor General of Pakistan (AGP) has exposed significant financial irregularities in the National Highways Authority (NHA), amounting to an estimated Rs226.57 billion.

Key Findings

NHA awarded 10 road projects worth Rs61.76 billion without land acquisition
Failure to provide detailed calculations for the determination of specific material weightages for price adjustment formula
Unfinalized accounts for several projects

Issues Leading to Audit Observations

The audit identified the following issues:

Award of works involving future spending
Accounting for multiple years of spending
Multiple reckonings of monetary impacts for the same transaction

Details of Financial Irregularities

Unacquired Land for 10 Road Projects

Between 2020 and 2021, the NHA awarded 10 road projects worth Rs61.76 billion. However, the required land had not been acquired or possessed for these projects. This led to a significant irregularity, with the NHA citing weak internal controls and disregard for Planning Commission guidelines.

Example: the “Improvement & widening of Chitral-Booni-Mastuj-Shandur Road project” had an unfunded PC-I for land acquisition, yet the work was initiated.

Lack of Calculations for Price Adjustment

The audit reviewed contracts worth Rs56.91 billion for 11 road projects in 2020. The authority failed to provide detailed calculations for the determination of specific material weightages for the price adjustment formula, as required by the Pakistan Engineering Council (PEC) procedures.

Unfinalized Accounts

The NHA awarded contracts to different contractors for projects completed between February 2017 and July 2019, totaling Rs356.41 billion. Yet, neither the accounts nor the PC-IV and PC-V for these projects had been finalized.

Examples: the Yakmach Kharan project had not even started the process of conducting mandatory surveys, obtaining taking over and substantial completion certificates, and preparing the stock register for assets. Several other projects, including those for road rehabilitation and improvement in Mianwali, also lacked finalized accounts.