ISLAMABAD: The latest audit of the National Engineering Services Pakistan (Nespak) for the fiscal year 2024-25 has laid bare severe financial discrepancies, highlighted by a staggering aggregate of Rs13.78 billion in unrecovered receivables.
The Auditor General of Pakistan (AGP) revealed that while total revenue increased from Rs7,002.937 million in FY 2020-21 to Rs14,019.167 million in FY 2024-25, expenditures climbed sharply from Rs7,736.249 million to Rs13,009.256 million.
Most notably, sub-consultancy costs skyrocketed over 284% from Rs910.1 million to Rs3,496.6 million over the same period, driving a severe cash-flow crisis despite rising revenues.
The Auditor General raised serious concerns regarding the legality and governance of Nespak’s leadership, citing a severe, prolonged violation of Sections 223 and 233 of the Companies Act, 2017.
The audit noted that Nespak has failed to finalize, approve, audit, and file its mandatory annual financial statements for four consecutive fiscal years, namely FY 2021-22, 2022-23, 2023-24, and 2024-25, within the prescribed statutory timelines.
This backlog has completely impeded financial transparency, preventing stakeholders and the line ministry from obtaining an accurate view of the company’s actual fiscal health, while also drawing two formal demand notices from the Securities and Exchange Commission of Pakistan (SECP) for non-compliance.
In tandem with these transparency failures, auditors discovered that Nespak completely failed to prepare, review, and adopt its mandatory three-year rolling Business Plan for FY 2024-25, which is a strict legal requirement under Section 8(1) of the State-Owned Enterprises (SOE) Act, 2023.
By operating without this strategic blueprint, the company has functioned without approved revenue targets, risk assessments, project pipeline management, or human resource capacity plans, effectively compromising its long-term viability. Furthermore, the audit criticized the widespread “unstable idle hours” among permanent human resources, representing a severe waste of technical expertise and a major drain on liquidity.
The AGP also identified fundamental flaws in Nespak’s procurement and contracting procedures, noting they are entirely out of alignment with Public Procurement Regulatory Authority (PPRA) Rules.
Auditors detected severe discrepancies in bid evaluations, non-standardized evaluation criteria, and a lack of consistent documentation.
Crucially, the report highlighted that Nespak bypassed competitive processes altogether in some instances, directly engaging associated entities like TurkPak International (Pvt.) Ltd. and the Nespak Foundation for hiring and sub-consultancy services.
The report also raised red flags over Nespak’s loss-making overseas operations, stressing that key project-level decisions in foreign branches remain unmonitored and undocumented, lacking structured frameworks to convert international offices from liabilities into profit-generating hubs.
To arrest this downward spiral and enforce corporate accountability, the Auditor General of Pakistan has put forward a series of stringent, corrective directives.
The AGP has ordered the company to fix responsibility and take immediate action against the management officials and Board members who failed to produce audited financial statements since 2021.
Additionally, the report demands that Nespak immediately discontinue sole-source sub-consultancy contracts with associated entities, enforce strict financial penalties on clients defaulting on invoice payments to recover all outstanding receivables, and conduct a comprehensive viability assessment of all foreign subsidiaries to determine if they should be restructured or immediately liquidated.
