The Khyber Pakhtunkhwa Economic Zones Development and Management Company (KPEZDMC) has been flagged by the Auditor-General of Pakistan (AGP) for billions of rupees in unrecovered dues, financial losses, payments for land without securing possession, irregular allotment of commercial plots, and serious governance failures.
The audit report for the financial year 2024-25 also estimates the company's contingent liabilities arising from land compensation litigation at Rs14 billion, raising significant concerns over its long-term financial sustainability and the management of public resources. The report found that KPEZDMC failed to recover Rs2.085 billion in decretal lease money from industrial allottees, managing to collect only Rs208.938 million.
This shortfall highlights a systemic failure in revenue collection mechanisms that has persisted over several years. It also identified an estimated loss of Rs629.889 million after commercial lease agreements in the Peshawar Economic Zone expired in 2017 and a renewal policy was not formulated until 2024.
During the intervening period, businesses continued operating without paying renewal charges. Auditors have strongly recommended fixing responsibility for the delay and recovering all applicable charges and penalties.
Furthermore, the company paid Rs1.077 billion for land intended for economic zones in Buner, Mohmand, and Jalozai, but acquisition remained incomplete and physical possession had not been secured. Separately, land compensation disputes have exposed KPEZDMC to estimated contingent liabilities of Rs14 billion.
The audit also identified an estimated loss of Rs174.158 million resulting from the irregular allotment of commercial plots as industrial plots. In the Hattar Economic Zone, four plots covering 10.04 acres were allotted to a company, but construction obligations were not fulfilled.
Outstanding dues against the allottee currently stand at Rs497.844 million, yet no recovery action has been initiated. Governance shortcomings were another major concern highlighted by the AGP.
KPEZDMC operated without a Board of Directors during 2024-25, while key positions, including Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operating Officer (COO), and Company Secretary, remained vacant for extended periods. The company reported a net loss of Rs151.459 million for the year.
These figures paint a grim picture of an organization struggling with both administrative oversight and financial discipline. KPEZDMC CEO Shaharyar Gul, in his formal response, said that a substantial portion of the reported amount related to legacy land compensation liabilities arising from judicial proceedings and should not be construed as financial misappropriation.
He stated that the company remains committed to transparency and full compliance with applicable laws.