Auditor General flags Rs10.17bn overpayment to Diamer Bhasha contractor

An audit report by the Auditor General of Pakistan has flagged more than Rs10.17 billion paid to the main contractor of the Diamer Bhasha Dam after the payment mechanism for the contract was changed, in a project where financial progress has run almost twice as far as construction.

The 2025-26 report, carried by Express News, records that physical work on the dam stood at 19.95 per cent by June 2025 while financial progress had reached 39.67 per cent.

More than Rs73.31 billion meant for land acquisition and the resettlement of affected people was transferred to the bank account of the Deputy Commissioner and Land Acquisition Collector, Chilas, between October 2010 and June 2021. The collector then moved more than Rs4.96 billion of that money into 24 private banks, which the audit calls a breach of treasury rules, and it recommends that responsibility be fixed.

The main dam construction contract went to a joint venture of Power China and the Frontier Works Organisation for more than Rs442.40 billion. The audit says the contractor's qualification criteria were not fully applied and objects to a Rs27.18 billion consultancy services contract. It notes the selection method was first quality and cost based and was later changed to quality based selection.

On the Rs10.17 billion, the report says the amount for RCC concrete in the bill of quantities was split into two payments and the payment route altered without the related work being done.

Payments of more than Rs20.52 billion were made without deducting the 10 per cent retention money due under the agreement, an excess of more than Rs674.5 million. Instalments of a Rs1.92 billion mobilisation advance were not deducted on time, and recovery of a further Rs1.12 billion was approved in 50 instalments.

The audit called inappropriate more than Rs537.3 million paid to the contractor for offices and residential facilities for consultants, and questioned more than Rs104.2 million paid against a claim for accommodation for security personnel. It recorded a loss of more than Rs100 million from a design change and more than Rs83 million in extra payment from abnormal rates used in construction work. At Cadet College Chilas, tuff tiles were laid at rates above the official schedule, and the report lists about Rs20 million in Khyber Pakhtunkhwa road repair costs that were not recovered, along with objections over drivers' salaries and petrol for bulletproof vehicles.

More than Rs498.8 million was paid in advance to the Deputy Commissioner and Land Acquisition Collector, Kohistan, for land, and more than Rs40 million owed by the Gilgit-Baltistan government for operation and maintenance of the powerhouse was not recovered.

Of 35,924 acres to be acquired, 32,790 acres had been taken by June 2025, leaving 3,134 acres.

Four of the 16 board seats of the company set up for the project were vacant and its annual financial statements for 2022-23 to 2024-25 were not prepared, despite the prime minister's instructions to fill the vacancies. The audit recorded a cost increase of more than Rs91.32 billion.

Completion was first set for June 2027. The contract date is February 2029, and the extended schedule puts expected completion in 2030. The PC-I for the 4,500 MW powerhouse was approved in April 2023, but no construction contract for it had been awarded by the end of the audit period.

The Auditor General recommended a full examination of all financial matters relating to land acquisition and contractors, and that unauthorised payments and outstanding amounts be recovered.