LAHORE: The Auditor General of Pakistan has detected over Rs514 million irregularitiesin the operation ofthe Lahore Transport Company (LTC) during 2015-16 and bemoaned that the company is not providing the previous record for auditing.

In 19 audit objections, it has found the company violating the PPRA rules, making doubtful payments, failing to recover its own dues, non-production of previous record (2012-13 and 2013-14) for audit and not following the Corporate Governance Rules.

Haider Latif, the chief of the Lahore Transport Company, however, says `there are no irregularities.

To begin with and lethal for a company designed to subsidise public transport worth millions of rupees of public money, the audit questionsthe verybasis ofcalculation offare collection and the subsidy (Rs216 million for 2015-16) disbursement when it maintains that the system is not fully automated and does not provide a sound basis for subsidy calculation, making the entire payment (of Rs216 million) `doubtful.` The LTC, notes the audit, has itself paid Rs10 million to install the same semi-automated system.

Despite the system, the revenue record still largely depends on the fare collector (manual system). It is he who presses the key for the amount and the same is recorded in the system. `The audit is of the view that on the basis of semi-automated system, total revenue of the operator is determined by the fare collector (manually) and the e-ticketing is just a recording device. On the basis of this system, the LTC paid Rs216.378 million which is doubtful. (The LTC should) justify the reason for paying huge expenditure for semi-automated device on which behalf subsidy is paid.

In the report, the LTC maintains that it is working on upgrading the system to full automation.

The auditor also points out that the Lahore Transport Company suffered a massive loss of Rs61 million because of failure to achieve budgeted income targets. `The revenue loss of Rs60.99 million was sustained by the LTC due to non-achievement of target income, especially depot rent that has 100pc negative variance and e-ticketing has 68pc negative variance both need justifications. (The LT C must) justify the reasons for f ailure to achieve targets and fix the responsibility.

The audit report also says it asked for documents to prove that it was complying with the Corporate Governance because it was a Section 42 company registered with the Securities and Exchange Commission of Pakistan. `But no documentation regardingcompliance of the said guidelines were provided. The audit, therefore, assumes that it was not following Corporate Governance Rules, 2013.

In its reply, the LTC, however, thinl(s that these rules do not apply to it.

In one case of receiving performance guarantee through open cheque and then failing to re-possess 25 buses for next six months when the cheque returned, the company suffered a loss of Rs114.477 million.

Even when the company moved against the defaulter, it lodged a case of recovery of Rs93 million, not Rs114 million. The company is also reluctant to recover Rs21 million for maintenance and repair cost. The AGPR is of the view that not only money (including the cost of maintenance) should be recovered, but responsibility should also be fixed.

Similarly, the case for advertising for bus shelters has caused a loss of another Rs19 million. A company was given these rights in 2010 for Rs4.713 million per month. Later, due to unknown reasons, this rent was reduced to Rs3.416 million per month. The firm, as per agreement, was bound to provide bank guarantee amount to Rs14.139 million.

The LTC, against the terms of the agreement, accepted guarantee payment through cheque, which was later dishonored. The LTC waited for another five months before legally proceeding against the company. The case was decided in favour of the LTC in 2014, but it is yet to make recoveries.

Instead of moving the court for recovery of Rs19 million (including other losses), the LTC proceeded for recovery of Rs14 million only. `Responsibility needs to be fixed in the LTC for granting undue favours and relaxations to a defaulting firm,` says the report.

Over Rs11 million losses came from the advertising rights on 92 buses. According to the report, the LTC first released bank guarantee of the winner and then moved the court for its recovery. The report says the LTC floated a tender for advertising rights in early 2016 and the successful company quoted a price of Rs2.750 million per month.

The company was given acceptance letter in May 2016 and it was supposed to submit bank guarantee within 30 days, which it did not inflicting a loss of Rs8.6 million (rental and opportunity cost) on the LTC.

The LTC went to the court for recovery of this loss but meanwhile, it released the bank guarantee of the same that it had submitted to the previous year (2014-15).

The report also includes some other paras for minor losses which are part of the total Rs514 million for a company that disbursed Rs216 million subsidy for which it was originally formed.