PAC Orders Cabinet Division Report on Nespak's Rs 43 Billion Project Losses
Pakistan's Public Accounts Committee has directed the Cabinet Division to submit a full inquiry report on Nespak's alleged multi-billion rupee irregularities, centred on the Rs 43 billion Neelum Jhelum Hydro Power Project. Auditors estimate Rs 42.9 billion in losses from the project, which has been unable to generate power since a second tunnel collapse in May 2024.
Pakistan's Public Accounts Committee (PAC) has directed the Cabinet Division to submit a comprehensive inquiry report into alleged multi-billion rupee irregularities by Nespak (National Engineering Services Pakistan), with the Rs 43 billion Neelum Jhelum Hydro Power Project at the centre of audit concerns. The directive came on Thursday during a PAC session chaired by Syed Naveed Qamar to review Cabinet Division audit objections for the 2024–25 financial year. Secretary Cabinet Division Kamran Ali Afzal confirmed that a high-level inquiry into the Neelum Jhelum matter was already underway.
Tunnel Collapses and Rs 42.9 Billion in Losses
The Neelum Jhelum Hydro Power Project has had a troubled operational history. The plant's generation tunnel collapsed in July 2022 after only five to six months of commercial operation, forcing a complete shutdown. Restoration responsibility was transferred to Neelum Jhelum Hydro Power Company Pvt Ltd, but a second tunnel collapse in May 2024 halted all power generation — and the plant has not produced electricity since.
The Auditor General's office estimates total losses at Rs 42.9 billion, covering foregone generation revenue and restoration expenditure. Auditors attribute these losses to poor workmanship and inadequate consultancy services. Nespak was engaged at every stage of the project — from original structural design through to on-site construction supervision — making the firm accountable across all phases where failures occurred.
Fraudulent Verifications and Further Audit Objections
The PAC session surfaced additional concerns beyond Neelum Jhelum. Auditors flagged the Federal Government Employees Housing Authority (FGEHA) infrastructure development project at Park Road, Islamabad, where a Nespak engineer representative allegedly certified incorrect values for contractor work. The faulty certifications led to Rs 1.4 billion in wrong payments to contractors — a finding the Auditor General's office described as fraudulent verification.
The PAC session also referenced irregular payments and overseas-related losses in other Nespak-linked projects. The Cabinet Division was directed to consolidate all findings into a single comprehensive report rather than address each objection individually during the meeting.
Government's Position and Next Steps
Secretary Kamran Ali Afzal assured PAC Chairman Syed Naveed Qamar that the highest-level inquiry into the Neelum Jhelum project was already in progress, with full details to be included in the Cabinet Division's forthcoming report. The PAC's formal direction carries parliamentary oversight authority, placing the government under obligation to respond in writing.
Nespak is one of Pakistan's longest-established state-affiliated engineering consultancy firms, engaged on major federal projects spanning energy, water, and transport. The outcome of this inquiry could influence how the government structures accountability for consultancy services on future public-sector power and infrastructure contracts.
Frequently Asked
Questions about this story
What is Nespak and why is it under investigation by the PAC?
Nespak (National Engineering Services Pakistan) is a state-affiliated engineering consultancy firm involved in major federal infrastructure and energy projects. It is under investigation following audit objections alleging that faulty design and supervision services on the Rs 43 billion Neelum Jhelum Hydro Power Project caused an estimated Rs 42.9 billion in public losses.Why has the Neelum Jhelum power plant stopped generating electricity?
The plant's generation tunnel collapsed in July 2022 after just five to six months of commercial operation, and collapsed again in May 2024 during restoration. All power generation has been fully halted since May 2024, with auditors attributing both failures to poor workmanship and inadequate consultancy services provided by Nespak.How much public money has been lost on the Neelum Jhelum project?
The Auditor General's office estimates losses of Rs 42.9 billion, covering foregone generation revenue and restoration costs. The original project cost was approximately Rs 43 billion, meaning the scale of alleged losses is nearly equal to the full project value.What are the Rs 1.4 billion fraudulent payments related to?
A Nespak engineer representative allegedly certified incorrect values for contractor work on the Federal Government Employees Housing Authority infrastructure project at Park Road, Islamabad. These faulty certifications resulted in Rs 1.4 billion in wrong payments to contractors, which the Auditor General's office flagged as fraudulent verification.Will the Nespak PAC investigation affect electricity bills for consumers?
The investigation itself will not immediately change electricity bills. However, the Rs 42.9 billion in Neelum Jhelum losses contributes to Pakistan's circular debt, which is ultimately recovered from consumers through capacity charges and tariff adjustments applied across all WAPDA-served DISCOs including LESCO, IESCO, MEPCO, and PESCO.
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