Audit flags Rs16.94bn irregularities in KP minerals department

The KP minerals audit has flagged financial irregularities worth Rs16.94 billion in the province’s Mines and Minerals Department. The Auditor General of Pakistan conducted the review, and it points to heavy losses from illegal mining and weak recovery of government dues.

The audit covers 2022-23. It shows a department sitting on rich minerals but failing to collect what the province is owed.

What the KP minerals audit found

Illegal mining caused the largest losses. The audit estimated the damage at Rs8 billion to the provincial exchequer. Inspectors and check posts existed in several districts, yet illegal extraction continued. The report put the additional loss from that failure at Rs1.83 billion.

The department also failed to recover Rs4.31 billion from defaulting contractors. That figure stands out because it represents money already owed to the province, not projected revenue.

Other findings add to the total. Mineral lease holders owed Rs810 million in unpaid dues. Profits from joint venture agreements worth Rs580 million never reached the provincial treasury. The department collected land rent at Rs200 per acre in Peshawar instead of the notified Rs10,000 per acre, causing a Rs140 million loss.

Smaller but telling items appear too. Mining dues for small dam projects in Kohat, Nowshera, Swabi, Haripur and other districts went unrecovered, costing Rs530 million. The failure to award regular mineral contracts in Peshawar, Kohat and Dera Ismail Khan cost Rs250 million. Royalty dues of Rs63.6 million in Mardan remained unpaid.

Recovery efforts fell short

The audit said the department made no serious attempt to recover the outstanding dues.

A separate audit of the KP Mineral Development Department, covering 2023-24, told a similar story. It found Rs1.678 billion in losses from illegal mining, outstanding as of July 2024. Out of 8,400 illegal mining cases, the department converted 5,275 into first information reports. The remaining 3,125 cases were still pending.

The department had been asked to convene a Departmental Accounts Committee meeting to discuss the objections. Letters went out in September and December 2024, but the meeting did not take place before the audit report was finalised. The audit noted that the same irregularity had appeared in earlier reports, calling the recurrence a matter of serious concern.

What this means for KP’s mineral push

The timing of these findings matters. Pakistan is trying to turn its mineral wealth into revenue and jobs. Just this week, Pakistan signed a minerals exploration deal with Turkiye covering antimony, gold and copper in Balochistan. The contrast is sharp: the country courts foreign investment in minerals while one of its provinces loses billions to poor oversight.

Khyber-Pakhtunkhwa holds coal, limestone, marble, gemstones and other minerals. If managed well, these resources could fund schools, hospitals and roads. If managed as the audit describes, they become a drain.

It is worth keeping one point in perspective. An audit flags matters for examination. Its findings do not by themselves prove corruption or establish that any official is guilty of wrongdoing. The department has not yet issued a public response to the objections.

Pressure builds for reform

The National Accountability Bureau has taken notice of one part of the problem. NAB’s Khyber-Pakhtunkhwa chapter has opened an inquiry into illegal mining of placer gold, covering officers and officials of the Mines and Minerals Department.

The spotlight on Pakistan’s economic governance will only grow as the country prepares to chair the IMF and World Bank boards for the first time in over seven decades. Domestic revenue discipline will be hard to ignore under that lens.

For now, the audit sets a baseline: Rs16.94 billion flagged, Rs8 billion lost to illegal mining, and billions more stuck in unrecovered dues. Whether the department acts on it will decide how much of that money Khyber-Pakhtunkhwa ever sees.

Frequently asked questions

What did the KP minerals audit find?

The Auditor General of Pakistan flagged Rs16.94 billion in irregularities in the KP Mines and Minerals Department for 2022-23. The biggest item was an estimated Rs8 billion loss from illegal mining.

Which dues went unrecovered?

The department failed to recover Rs4.31 billion from defaulting contractors and Rs810 million from mineral lease holders. Joint venture profits of Rs580 million never reached the treasury.

Has anyone been held responsible?

The audit recommended investigation and recovery of the outstanding amounts. NAB’s KP chapter has separately opened an inquiry into illegal mining of placer gold involving department officials.