The National Audit Office (NAO) is undertaking a forensic audit at Escom almost six months after the corporation’s board made damning revelations of misprocurement decisions that put the power utility in financial mess.
Electricity Supply Corporation of Malawi (Escom) management announced yesterday that NAO was carrying out the forensic audit in connection with the misprocurement that occurred some years ago and other related issues within the corporation.
In June this year, Escom board chairperson Thom Mpinganjira ordered a forensic probe into what he described as “blatant disregard of procurement rules and regulations” that were sinking the State firm and threatening to bring down the power sector.
Two weeks later, Ministry of Finance, Economic Planning and Development also announced the launch of investigations into how Escom reached the point of requesting a K58 billion bailout, barely two years after being financially stable.
In its statement yesterday, Escom said the forensic audit started on Monday this week following a directive from President Peter Mutharika after he learnt about the mismanagement that is believed to have plunged the corporation into serious financial problems.
“Escom is making this announcement in line with its values to be accountable and transparent in its affairs,” reads the statement.
One of Escom’s biggest procurement scams was unearthed by our sister newspaper, Weekend Nation, in 2016 after an internal audit at the power utility uncovered a multi-billion kwacha heist of Cashgate form from the parastatal through dubious purchases.
Further, findings in the 2016/17 Auditor General’s report showed that Escom and another financially-troubled entity, State produce trader Agricultural Development and Marketing Corporation (Admarc) collectively abused K9.3 billion through procurement transactions they failed to account for.
Yesterday, NAO spokesperson Rabson Kagwamminga asked for a questionnaire which he had not responded to as we went to press.
Speaking during a press briefing in June this year, Mpinganjira said the irregular procurement decisions had left the power utility body with materials that it may not use for as long as 10 years while some would, over time, become too technologically obsolete.
This resulted in Escom increasing its inventories—a list of goods in stock—to K22 billion this year from K3 billion in the 2011/12 financial year. This also affected the firm’s debt stock and financial position.
He said this forced the technically insolvent utility to seek a K58 billion bail-out from government to improve its operations and provide reliable power supply. But twice government has rejected the request.
Currently, Escom is owing Electricity Generation Company (Egenco) about K28 billion in unpaid bills for electricity supplied to its grid, a cash build-up that could also paralyse Egenco’s ability to produce electricity to power households and companies.
Reacting to NAO forensic audit, human rights activist and social commentator Undule Mwakasungula commended government for the exercise which he observed will build confidence.
He said: “It’s a move that shows government is equally concerned with what has been happening in State institutions like Escom.”
Escom is also currently embroiled in a theft scandal of four million litres of diesel meant for the running of power generators by a contracted independent power producer which it manages.
(Source: The Nation Malawi, 6th December 2018)