Fenaka Audit Leaves 2024 Accounts Unverified as Utility Services Move to STELCO

MVR 3.9 billion in liabilities and accounts auditors could not verify

Fenaka Corporation recorded a loss of MVR 547 million for 2024 and current liabilities of MVR 3.9 billion, but the Maldives Auditor General could not obtain enough reliable evidence to express an opinion on its financial statements. Missing accounting records, unsupported expenses and discrepancies in asset records left major parts of the state utility's accounts unverified.

The audit, issued on November 1 and signed by Auditor General Hussain Niyazy, identified a reported gap of MVR 2.7 billion between current liabilities and the assets available to cover them. Current liabilities are bills and other obligations generally due within a year. A gap of that size puts pressure on a company's ability to pay suppliers and keep services running.

Fenaka provides essential electricity, water and sewerage services across island communities. Its financial problems therefore reach beyond an accounting office: they affect the organisation responsible for powerhouses, equipment, construction projects and payments to businesses supplying those services.

The findings also arrive during a major restructuring. The 2024 audit describes planned transfers to STELCO and the Male Water and Sewerage Company, or MWSC, whose financial effects had not been assessed. A subsequent update dated November 6, 2026, says STELCO completed the transfer of services on the remaining 127 islands, with Laamu Fonadhoo the final island.

Two connected problems run through the record: Fenaka has struggled financially, and its records have repeatedly been too incomplete for auditors to check crucial figures. Moving services to another operator changes who runs them, while the accounting gaps leave difficult work in establishing the value of assets and the amount owed.

What a disclaimer of opinion means

The Auditor General issued a disclaimer of opinion on Fenaka's 2024 financial statements. In plain language, the auditor could not obtain enough suitable evidence to give a conclusion on the accounts. Readers are therefore left without an auditor's assurance on the financial picture presented by the company.

Fenaka could not substantiate the opening balances for 2024 or the comparative figures for 2023. Opening balances are the amounts carried into a new year from the previous one. When those starting amounts cannot be checked, the difficulty carries into the next year's calculations.

The company also failed to provide complete details of journal entries made during 2024. These are accounting entries used to record transactions and adjustments. Auditors need the full record to trace how figures reached the financial statements.

The same difficulty appeared in the Auditor General's 2022 financial audit, Report No. FIN-2025-42(E), signed on May 27, 2025. The office also disclaimed an opinion for that year and said Fenaka had not provided a complete list of journal entries.

The Auditor General's Office explained its conclusion in the 2022 report:

We do not express an opinion on the accompanying financial statements of the Company as at 31st December 2022.

A smaller loss, but continuing financial pressure

Fenaka's reported loss fell from MVR 811 million in 2023 to MVR 547 million in 2024. That is a reduction of MVR 264 million, or about 33 percent. The company nevertheless continued to record a substantial annual loss while facing large obligations to creditors.

The financial strain was already evident in 2022. Current liabilities rose from MVR 1.57 billion in 2021 to MVR 3.20 billion in 2022, more than doubling. At the end of 2022, current liabilities exceeded current assets by MVR 1.95 billion.

The 2022 audit's discussion of financial survival gives a loss of MVR 425.25 million, while the accompanying income statement records MVR 418.89 million. Both figures describe a sharp reversal from the MVR 17.28 million profit recorded for 2021.

Fenaka prepared its 2022 accounts on a going concern basis, meaning it expected to continue operating. Its explanation relied on routine government support, extended credit terms and other concessions, together with the board's intention to keep operating. The auditors said missing evidence prevented them from expressing an opinion on its ability to continue as a going concern.

Project income and government subsidies lacked support

The 2024 audit found that Fenaka lacked an adequate system for accounting for MVR 36.8 million in income and MVR 357.9 million in costs from subcontracted projects. Reliable project accounting should connect money received and spent with contracts, completed work and supporting documents.

Subcontracted projects had also presented problems in 2022. Fenaka recorded MVR 117.98 million in related revenue and MVR 70.81 million in expenses that year, but the Auditor General found no proper mechanism for recognising those amounts. The office could not verify their completeness, existence or accuracy.

The 2024 audit also examined government subsidies totalling MVR 789 million. Within that amount, MVR 20.5 million for mosque electricity tariffs lacked a formal agreement. That left auditors without the contractual basis needed to check the subsidy arrangement.

Government support had become a major part of keeping Fenaka operating. The special audit covering procurement and management during 2021–2023 identified MVR 4.03 billion in assistance provided from 2021 through 2024. Checking subsidy claims matters both for the utility's accounts and for the public money used to support services.

Equipment, construction and stock records did not match

Fenaka's fixed asset register differed from its 2024 financial statements by MVR 147.5 million. A fixed asset register is the detailed list of long lasting property and equipment that supports the totals shown in the accounts.

The auditors also could not verify MVR 1.6 billion recorded as capital work in progress. This category generally covers spending on facilities and other assets still being built. Checking it requires evidence of what was purchased, what work was completed and how much each unfinished project is worth.

Inventory records presented another major problem. Against a reported inventory balance of MVR 530 million, the audit identified MVR 444.5 million recorded as negative balances. Negative stock entries mean the records show quantities or values below zero and require reconciliation with actual stock and transaction records.

Similar weaknesses existed in 2022. The asset register and financial statements differed by MVR 8.67 million in original asset costs and MVR 43.93 million in accumulated depreciation, the accounting reduction in value over time. Auditors also could not verify MVR 873.69 million in inventory or MVR 27.39 million in stock written off that year.

Unverified bills and a mismatch in share capital

Supporting documents were missing for MVR 398.4 million of the MVR 1.4 billion recorded as administrative expenses in 2024. That represents about 28 percent of the total, leaving a substantial share of spending without the evidence requested by auditors.

The accuracy of MVR 3.5 billion in trade payables also could not be verified. Trade payables are amounts owed to suppliers for goods or services. Establishing the correct balances is essential for deciding which bills must be paid and for planning the cash needed to maintain operations.

Fenaka reported share capital of about MVR 2.5 billion, compared with MVR 750 million registered with the Ministry of Economic Development. Share capital records investment by a company's owners. The MVR 1.75 billion gap requires reconciliation between the company's books and its registered corporate information.

The earlier financial statements already recorded share capital of MVR 2.5076 billion in both 2021 and 2022. The 2024 finding therefore concerns a large balance carried through the company's accounts over several years.

A separate audit traced procurement and construction failures

The special audit of 2021–2023 examined how Fenaka bought goods, awarded contracts and managed projects. Its focus was different from the annual financial audit, which assessed whether the financial statements could be supported by sufficient evidence.

The special audit identified MVR 8.8 billion spent on goods and services. Its findings included MVR 1.37 billion in projects awarded without competitive tendering. Published descriptions give contract totals of 673 and 674, with both putting the share awarded without open bidding at 65 percent. The broader tally of 674 contracts carried a value of MVR 2.22 billion.

Fenaka spent more than MVR 1 billion on 57 projects to build powerhouses and offices, with 41 still unfinished at the end of 2024. The audit findings put the additional money needed to finish them at MVR 241 million and estimated construction costs at MVR 767 million above contracting at market rates. Those figures measure different things: remaining expenditure and the excess cost compared with an alternative way of delivering the work.

Other findings included MVR 221 million in spare parts procured after seeking a quotation from only one party, goods worth MVR 12.3 million imported before bids were awarded, and MVR 26.5 million released as project petty cash. Of that petty cash, MVR 21 million went into managers' personal bank accounts.

Accountability extends to management and government oversight

Auditor General Hussain Niyazy told Parliament's Finance Committee that purchase orders worth MVR 3 billion were missing from Fenaka's accounting system when the special audit began in 2023. He said the discovery delayed the audit.

Niyazy told the committee that management and company boards were responsible for accountability and pointed to the Companies Act and state ownership policies. He explained why investigations alone would not repair weak controls:

Wastage and fraud cannot be prevented through a special audit alone.

The special audit also identified MVR 49.7 million in contracts awarded to companies linked to former managing director Ahmed Saeed's family, and MVR 111.9 million in diesel purchases from Sirius Enterprises without formal supply agreements. It listed MVR 107 million in contracts to Azzrova Maldives, which contributed MVR 2 million to former president Ibrahim Mohamed Solih's reelection campaign.

Saeed denied wrongdoing and described the special audit as rushed and politically motivated. He received a prison sentence of four years in a separate case involving authorisation of payments for public relations services under a 2019 settlement relating to an earlier contract.

Staffing added another cost pressure. Fenaka employed close to 7,700 people despite estimating that it needed around 3,000, with a reported annual salary bill of MVR 840 million. Proposals to divide the company into two regional utilities had been floated before the subsequent transfers of services.

Transfers change the operator, while financial questions remain

The 2024 audit records a September 2026 board decision to transfer some services to STELCO and plans to move water and sewerage services in Addu City and Fuvahmulah to MWSC. It says the financial effects of those changes had not yet been assessed.

A November 6, 2026 update describes STELCO's transfer programme as complete, following President Mohamed Muizzu's September 7 announcement of a decision to dissolve Fenaka and transfer services. Laamu Fonadhoo was the final island, with a ceremony held there on November 5. Four STELCO teams worked across the atolls to implement the transfers.

The main dates show how the financial scrutiny and operational changes unfolded:

• 2021–2023: The period examined by the special procurement and management audit.
• 2024: Fenaka recorded a loss of MVR 547 million; 41 construction projects remained unfinished at year end.
• May 27, 2025: The Auditor General signed the financial audit for 2022, also disclaiming an opinion.
• September 7, 2026: President Muizzu announced the decision to dissolve Fenaka and transfer services.
• November 1: The financial audit for 2024 was issued.
• November 6, 2026: Completion of STELCO's island transfer programme was reported.

STELCO Managing Director Dr. Ali Azwar attended the Fonadhoo ceremony and committed the company to reliable services. STELCO said it had changed branch structures to support the transferred operations. For residents, continuity of electricity and other essential services is the immediate priority; for the institutions managing the restructuring, establishing accurate asset, debt and project balances remains central to the financial work.

Key Points

• The Auditor General disclaimed an opinion on Fenaka's 2024 accounts because sufficient audit evidence was missing.
• Fenaka reported a MVR 547 million loss and MVR 3.9 billion in current liabilities.
• Major uncertainties involved project accounting, inventory, construction assets, expenses and supplier balances.
• The 2022 financial audit had already identified similar record keeping failures.
• A separate special audit examined procurement and management during 2021–2023.
• STELCO's transfer programme was reported complete on November 6, 2026; the 2024 audit had not assessed the restructuring's financial effects.