NHA contractor delays toll deposits, Rs3.49bn penalty remains unrecovered

Delayed toll revenue deposits by a contractor under the National Highway Authority’s Rs12.2 billion Electronic Toll Collection contract resulted in an unrecovered penalty of Rs3.49 billion in FY2024-25, according to the Auditor General of Pakistan’s latest audit of the system operating on major motorways including M-1, E-35, M-14, M-3, M-4 and M-5.

According to the report, the contractor had received Rs10.752 billion, or 88% of the contract value, by June 30, 2025, but had not installed the Automatic Vehicle Classification system. The missing German-origin AVC sensors were valued at Rs1.4 billion.

The audit said non-installation of the AVC system affected independent verification and audit of Rs39.38 billion in toll revenue collected between July 2022 and June 2025. Management linked the delay to federal import restrictions and foreign exchange shortages during 2022-23.

The report said the contractor was required to deposit toll revenue daily into a joint escrow account but retained increased collections for four consecutive quarters in FY2024-25 before depositing them.

The penalty was calculated at Rs426.901 million for July-September 2024, Rs822.828 million for October-December 2024, Rs810.019 million for January-March 2025 and Rs1.440 billion for April-June 2025, bringing total unrecovered penalties to Rs3.499 billion.

The audit said NHA did not penalise the operator despite the delays, increasing the risk of revenue leakage and financial misreporting.

It also noted that NHA lacked real-time visibility of traffic data and had not arranged independent third-party transaction verification. Agreements with entities such as NIFT or NADRA were not executed.

The report also raised concerns over unauthenticated operations and maintenance payments of Rs3.124 billion in 2022-23, saying NHA did not properly verify whether services such as mobile workshops, rescue vehicles and building maintenance were fully operational.

The audit further said the operator did not maintain transparent records or share interest earned on unutilised Pak-Tag/M-Tag advance balances. It also failed to submit the required Rs500 million toll revenue security bank guarantee for M-1, M-3, E-35, M-4, M-5 and M-14.

The report also flagged procurement issues, saying the contract was awarded directly under Public Procurement Rules Rule 42(f) without proper assessment of price reasonability or full technical readiness.

The audit concluded that the project remained only partially operational and recommended that NHA enforce installation of the AVC system, recover penalties for delayed revenue deposits and hire an independent third party to validate toll transactions.