An audit by the Auditor General of Pakistan has uncovered financial irregularities and losses worth Rs18.46 billion at the Khyber Pakhtunkhwa Economic Zones Development and Management Company (KPEZDMC) during the 2024-25 fiscal year, pointing to poor planning, weak management and serious gaps in financial control at the state-owned company. The findings, contained in the auditor general’s report, say the damage to the public exchequer flowed from a combination of administrative failure and questionable decisions around land, leases and recoveries, and they raise fresh questions about how the province’s economic zones are being run.
One of the largest single heads in the report concerns money the company simply failed to collect. Auditors found that Rs2.08 billion in lease payments owed by industrial allottees for land handed over to them remained unrecovered even though court orders directing recovery were already in place, while the failure to renew commercial land agreements under a revised lease policy introduced in 2024 cost the exchequer a further Rs629.8 million. More broadly, the report flagged outstanding receivables of around Rs2.82 billion, an unsustainable revenue model and an excessive reliance on interest income rather than the company’s own operations.
The audit also laid bare a trail of land problems across the province. In Buner, Mohmand and Jalozai, the company failed to get government land vacated, a lapse the auditors put at Rs1.08 billion, while commercial land was handed over for industrial use in violation of the rules, causing a loss of Rs174.1 million. In Haripur, four plots numbered 185, 186, 187 and 190, together covering 10 acres, were allotted to Al-Hadeed Engineering, but the payment against the allotment was never collected, leaving a reported loss of Rs497.8 million.
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Behind the individual figures, the auditors found a deeper governance failure. The company operated without an active board, leaving it without strategic direction, effective oversight or compliance with legal requirements, and the report pointed to irregularities in contract awards, poor utilisation of available space and imbalances in human resource management. It also recorded that poor administrative decisions and steps allegedly taken to benefit favoured individuals had caused serious damage to public resources, a charge that goes to the heart of how public land and public money were handled.
Perhaps the most alarming finding for the company’s future is the scale of its contingent liabilities, which have reached Rs14 billion, driven largely by legal disputes over increased land compensation. The auditors warned that this burden poses a serious risk to the continuity of the company’s business operations, effectively putting a question mark over an institution meant to anchor industrial growth in the province.
The findings have already drawn a political response. Khyber Pakhtunkhwa Adviser on Information and Public Relations Samar Haroon Bilour expressed serious concern over the disclosure and called for an immediate, impartial and transparent inquiry to establish the facts, fix responsibility and recover outstanding dues. Stressing that public resources are held in trust, she said transparency and accountability in their use must be ensured at all costs and that no financial irregularity should be overlooked.
The report does not arrive in isolation. It comes days after another audit found irregularities of Rs16.94 billion in the province’s Minerals Department, suggesting a wider pattern of weak oversight in departments handling the province’s natural and commercial assets. KPEZDMC manages Khyber Pakhtunkhwa’s economic zones, including the Rashakai Special Economic Zone, a 1,000-acre flagship project under the China-Pakistan Economic Corridor on the M-1 motorway, developed jointly with China Road and Bridge Corporation, which makes the state of its finances a matter of direct interest to investors as well as taxpayers.
What happens next will matter more than the audit itself. Audit objections in Pakistan too often end up filed away without recovery or reform, and the test here will be whether the Rs18.46 billion in flagged losses leads to actual collection of dues, cancellation or correction of irregular allotments, and a functioning board with real oversight. Until then, the report stands as a reminder that the institutions created to attract industry and jobs can themselves become a drain on the public purse when governance is allowed to drift.
