KARACHI, Oct 26: The cash-strapped Karachi Development Authority, with about 6,000 employees on its payroll, is heading towards complete financial bankruptcy.

The KDA is in a financial strait at a time when only two months are left for its merger with the city government, under the devolution plan. So the financial crisis afflicting the KDA has become a matter of concern for both the provincial government and the leadership of the city government.

The financial managers of the city government, who are already perturbed over a substantial cut in the monthly matching grant which the federal government had been giving to local government institutions since the abolition of octroi duty, said after the merger of the KDA with the city government, the latter would have to arrange an additional amount of Rs538.596 million a year from January 2002 for the salary of the 5,919 employees of the KDA.

They were, however, optimistic that the KDA’s finances would improve in due course of time after its merger with the city government, as all of the three — the KDA, MDA and LDA — would function under one department of the city government. Besides, all efforts would be made to recover the KDA’s outstanding dues, including those against the federal and Sindh governments.

KDA officials said their organization, which was once an efficient public service-oriented institution, having the credit for providing 70 per cent of the planned housing stock and more than 70pc infrastructure, ie, water supply, road network, sewerage system and bridges, had now been reduced to the position of an “unsustainable organization” due to a number of reasons.

Several of the reasons for this state of affairs were, they said, transfer of the KDA’s housing schemes to the Malir and Lyari development authorities following their creation in 1993, non-payment of the KDA’s over Rs2,028m dues by the Sindh and federal governments. Besides, Rs66.286m had been frozen by the government in treasury, Rs38m had been forcibly taken away by the income tax department, Rs264.301m were receivable from the former deputy commissioner (Malir) on account of works executed in Scheme-33, Rs6.873m were receivable from the police department through the former deputy commissioner (West), Rs11.003m were due against the KWSB, Rs24.465m were outstanding against the KESC, Rs62.946m were due against the MDA, Rs2,308m were receivable from builders and developers, Rs595.19m were outstanding against various allottees and Rs10.244m were due from the NHA/federal government on account of low-cost housing of Junejo Town, etc.

The sources said the KDA had spent Rs2028.207m out of its own resources to undertake important works on behalf of the federal and Sindh governments, but this amount had not yet been paid to the KDA.

Out of the KDA were created the LDA and the MDA. As a result of this, not only the KDA’s land stock shrank but even a number of notified ongoing schemes, including Shah Latif Town (KDA Scheme No 25/A), Hawkesbay Scheme (KDA Scheme No-42), Taiser Town (KDA Scheme No 45) and Halkani Town (KDA Scheme No 43), having a total of 179,239 plots, had been transferred to the LDA and the MDA, the sources said adding that with the transfer of these ongoing schemes to the MDA and the LDA, the KDA had been burdened with Rs3,000m a month for the salaries of the employees of the schemes which were transferred to the LDA and the MDA.

The four development schemes, which were taken over by the MDA and the LDA from the KDA were, however, in limbo and had created the potential for massive litigation and public dissatisfaction, the sources said.

The KDA had control over only 5 per cent land of Karachi division which was almost developed or disposed of, and now it had no land, except the one- third prime land of its pipe factory, to launch new housing schemes.

Besides, it was left with very few plots for auction purposes, the sources said.

Whatever money the KDA had recovered during the past six months when it launched a special drive giving 40 per cent relief to the owners of plots under the head of non-utilization fee, had been consumed by its employees’ salaries, they added.

The KDA’s governing body had asked the KDA not to dispose of the few precious plots which were still available with it before the completion of its ongoing schemes, the sources said.