ISLAMABAD: The Auditor General of Pakistan (AGP) has raised serious concerns about a $398 million (Rs89.55 billion) investment made by Government Holding Private Limited (GHPL) in the Reko Diq copper and gold project in Balochistan.
The AGP criticizes the investment for being made without ensuring the availability of funds, particularly in US dollars, which is the currency required for the project.
GHPL, a state-owned company, acquired an 8.33% stake in the Reko Diq project on the instructions of the federal government. The project is a joint venture with Barrick Gold Corporation (50%), three other state-owned enterprises (25%), and the Balochistan government (25%).
The audit report highlights a lack of due diligence by GHPL, stating that the company did not properly assess its cash flow position before committing to the investment. The report also points out that GHPL reversed funds allocated for other objectives to finance the Reko Diq investment, potentially jeopardizing other ventures.
Furthermore, the AGP criticizes GHPL for failing to establish a US dollar account or make provisions for maintaining funds in US dollars, despite the fact that its share of the investment will be paid in that currency.
GHPL’s management responded to the audit concerns by claiming that the company is not exposed to liquidity risk and has the capacity to fulfill its commitments. However, the AGP remains unconvinced, citing the company’s own internal reports that indicate a decline in sales volume and potential future financial constraints.
The audit report highlights the potential for financial mismanagement and raises questions about the transparency and accountability of GHPL’s investment decisions.
