Which electricity distribution companies were named in the AGP audit report for 2025-26?

HESCO (Hyderabad Electric Supply Company), LESCO (Lahore Electric Supply Company), and FESCO (Faisalabad Electric Supply Company) were all flagged for operating without completed external audits for 2023-2025 and for having no internal audit functions in place.

What does it mean for consumers that LESCO, HESCO, and FESCO have unaudited accounts?

Unaudited accounts mean no independent auditor has verified these companies' financial statements for those years. This limits regulatory and public oversight of how subsidy funds are claimed and how infrastructure budgets are spent — both of which feed into NEPRA's tariff determinations for millions of households.

Does the Rs117.8 billion FBR super tax shortfall affect household electricity bills?

Not directly — the super tax applies to large corporations, not individual consumers. However, under-collected government revenue can reduce fiscal space for energy subsidies, which may indirectly put upward pressure on protected consumer tariffs over time.

How does the Rs117 billion petroleum recovery gap relate to electricity tariffs?

Unresolved recoveries in the petroleum sector add to Pakistan's circular debt — the accumulated arrears across the energy chain. Circular debt has historically been a primary driver of electricity tariff increases and remains a condition of concern under Pakistan's IMF programme.

What happens next after the AGP report is tabled in the National Assembly?

The report has been referred to the Public Accounts Committee (PAC) of the National Assembly. The PAC will scrutinise the findings, summon relevant officials, and can direct remedial action or refer cases for further legal or administrative proceedings.

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AGP Audit Flags Unaudited DISCO Accounts and Rs117.8bn FBR Super Tax Shortfall

Pakistan's Auditor General has flagged HESCO, LESCO, and FESCO for operating without audited accounts from 2023 to 2025, leaving the finances of three major electricity distribution companies unverified. The same report identifies Rs117.8 billion in under-realised FBR super tax and Rs117 billion in outstanding petroleum recoveries.

PowerPost AI Bureau · Reviewed by Editorial TeamJun 25, 20263 min read0 views

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Pakistan's Auditor General of Pakistan (AGP) has flagged three major electricity distribution companies — HESCO, LESCO, and FESCO — for operating without audited financial accounts from 2023 to 2025, in a sweeping federal audit report for 2025-26 tabled in the National Assembly by Finance Minister Muhammad Aurangzeb on Wednesday. The report, finalised by AGP Maqbool Ahmad Gondal, identifies irregularities worth billions of rupees across dozens of federal entities and will now go before the Public Accounts Committee (PAC) of the National Assembly for scrutiny.

Power Sector: Three DISCOs Without Audits for Two Years

The audit's most consequential energy-sector findings concern the electricity distribution companies (DISCOs) serving millions of consumers across central Punjab, southern Punjab, and Sindh. Auditors found that HESCO (Hyderabad Electric Supply Company), LESCO (Lahore Electric Supply Company), and FESCO (Faisalabad Electric Supply Company) have all gone without completed external audits for the financial years 2023 through 2025 — a two-year gap that leaves their finances unverified by any independent authority.

The report also flagged:

No internal audit functions in place at any of the three DISCOs
Withheld subsidy claims — government-owed receivables that remain unpaid to the companies
Stalled transmission projects that may be affecting supply reliability across their service areas

NEPRA (the National Electric Power Regulatory Authority) relies on accurate DISCO financials to set and review cost-reflective tariffs. A two-year gap in audited accounts at LESCO, FESCO, and HESCO undermines that process and limits the regulator's ability to assess true cost recovery for companies that collectively serve tens of millions of consumers.

Petroleum Division: Rs117bn in Unrecovered Funds

The Petroleum Division also drew scrutiny. Auditors identified approximately Rs117 billion in outstanding recoveries alongside a disputed gas subsidy balance running into hundreds of billions of rupees — the precise figure was not disclosed in the report summary. Unresolved petroleum-sector liabilities of this scale feed directly into Pakistan's circular debt, the accumulated financial shortfall across the energy chain that the International Monetary Fund (IMF) has consistently flagged as a structural risk under its ongoing programme with Islamabad. Settling these recoveries would, in principle, reduce the circular debt quantum and ease pressure on future electricity tariff adjustments.

FBR Super Tax Gap and Other Observations

The Federal Board of Revenue (FBR) was found to have under-realised Rs117.8 billion in super tax — a levy applied to large corporations — alongside shortfalls in unrecovered customs duties. Other findings across the report include:

PTA (Pakistan Telecommunication Authority): Failed to bring data centres under its licensing framework and did not penalise Ufone's operator despite verified illegal SIM activation cases
NTC (National Telecommunication Corporation): Found to be serving private-sector clients beyond its government-only mandate
Pakistan Railways: Allegedly encroaching on approximately 1,500 kanals of land
Defence Services: Spent nearly all of its Rs2.2 trillion allocation — reported as an observation, not a finding of wrongdoing

All observations in the AGP report represent the auditors' formal position and incorporate departmental responses submitted during Departmental Accounts Committee (DAC) meetings. No finding constitutes a final ruling until the PAC acts on it.

What This Means for Pakistani Consumers

For electricity consumers in Lahore, Faisalabad, and Hyderabad, the two-year audit gap at LESCO, FESCO, and HESCO means there is currently no independent verification of how these companies manage subsidy claims, operational costs, or infrastructure budgets — all inputs that influence the tariff determinations NEPRA issues for millions of households and businesses. Until the PAC compels the DISCOs to submit overdue accounts, the accountability gap persists and consumers have no assurance that reported costs are accurate.

The Rs117 billion petroleum recovery shortfall and the disputed gas subsidy balance matter to all energy consumers because unresolved circular debt has historically been a key driver of upward pressure on electricity tariffs and a point of friction with Pakistan's IMF programme. The PAC's review of these findings in the coming months will be a key indicator of whether the government will enforce financial discipline across both the power and petroleum sectors.

Frequently Asked

Questions about this story

Which electricity distribution companies were named in the AGP audit report for 2025-26?
HESCO (Hyderabad Electric Supply Company), LESCO (Lahore Electric Supply Company), and FESCO (Faisalabad Electric Supply Company) were all flagged for operating without completed external audits for 2023-2025 and for having no internal audit functions in place.
What does it mean for consumers that LESCO, HESCO, and FESCO have unaudited accounts?
Unaudited accounts mean no independent auditor has verified these companies' financial statements for those years. This limits regulatory and public oversight of how subsidy funds are claimed and how infrastructure budgets are spent — both of which feed into NEPRA's tariff determinations for millions of households.
Does the Rs117.8 billion FBR super tax shortfall affect household electricity bills?
Not directly — the super tax applies to large corporations, not individual consumers. However, under-collected government revenue can reduce fiscal space for energy subsidies, which may indirectly put upward pressure on protected consumer tariffs over time.
How does the Rs117 billion petroleum recovery gap relate to electricity tariffs?
Unresolved recoveries in the petroleum sector add to Pakistan's circular debt — the accumulated arrears across the energy chain. Circular debt has historically been a primary driver of electricity tariff increases and remains a condition of concern under Pakistan's IMF programme.
What happens next after the AGP report is tabled in the National Assembly?
The report has been referred to the Public Accounts Committee (PAC) of the National Assembly. The PAC will scrutinise the findings, summon relevant officials, and can direct remedial action or refer cases for further legal or administrative proceedings.

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