ISLAMABAD: The Chairman of the Board of Directors of Central Power Generation Company Limited (GENCO-II), Guddu, has sought the intervention of the Power Division to probe widespread irregularities and financial mismanagement within the company, which have reportedly caused billions of rupees in losses to the national exchequer, Newzshewz has reliably learnt.
According to sources, the Chairman, in a letter dated April 21, 2024, informed the Power Division that the Board—during its 178th meeting on September 12, 2024—had authorized the CEO and CFO to jointly complete formalities related to a major procurement. However, instead of seeking the Board’s approval for the final financial structure, the management unilaterally established a funded Letter of Credit (LC) worth Rs. 3.6 billion in favour of a supplier. The amount was invested in UBL without the Board’s approval—neither for the investment, the markup rate, the tenor, nor the associated terms and conditions.
Statutory auditors, M/s Riaz Ahmad & Co. (Chartered Accountants), were requested to review the matter. Their report identified several violations of procurement rules and legal procedures. The Board took serious note of the findings and issued Explanation Letters to the CEO and CFO on April 16, 2025.
In a separate case involving the dismantling of structures in Guddu Colony, the Board had authorized the CEO—during its 166th meeting on December 5, 2023—to oversee the demolition of 347 old houses. However, the management proceeded to issue tenders and work orders for dismantling 410 houses, along with unauthorized removal of a slaughterhouse, market (P-353), Chinese Camp (comprising 141 rooms and a steel tower), and a steel water tank—none of which had Board approval.
Following an initial inquiry by the CHCL team, the same audit firm was again called upon. Their report confirmed additional irregularities. As a result, Explanation Letters were issued to the CEO and concerned managers on April 16, 2025.
Another major issue involved the procurement of substandard air filters and spare parts worth USD 532,800 for the 747MW Combined Cycle Power Plant (CCPP) at Guddu. The plant includes two GE Frame 9FA Gas Turbines and one steam turbine, each equipped with air inlet filter houses not covered under GENCO-II’s existing Contractual Service Agreement (CSA) with GE.
Although filters were supposed to be procured via International Competitive Bidding (ICB) under PPRA Rules, GE recommended M/s Parker Hannifin as the sole OEM. Acting on this, a FORA committee at CHCL level—endorsed by former CEO CPGCL Mr. Junaid Ahmed Baig and GHCL CEO Mr. Shahid Mahmood—declared Parker Hannifin the OEM. However, FORA later reported that the company did not qualify under Rule 42(c)(ii) of PPRA and was not the OEM.
Despite this, a direct purchase order worth USD 512,800 was placed with GE without following the tendering process. Although delivery was contractually required within 60 days, the filters were delayed by 150 days. Management later claimed that installation was satisfactorily completed. However, by December 29, 2024—within four months of installation—the filters were found to be severely choked, leading to a drastic drop in turbine output from 243MW to 130MW.
An internal inquiry concluded the filters were substandard. The Board subsequently directed a third-party inspection of the air filter systems at GT-14 and GT-15, in the presence of a GE representative.
“We are afraid this matter cannot be resolved at the management level and may require escalation to the Ministry for a thorough and impartial investigation,” the Chairman stated.
Meanwhile, the matter of outstanding payments to M/s Al-Tariq Constructors (Pvt.) Ltd., relating to the Gas Boosting Compressor Station project, is currently under arbitration.
The Chairman further expressed concern over the Board’s longstanding but unsuccessful efforts to secure insurance for the Guddu plant and requested the Ministry’s intervention.
ENDS
