ISLAMABAD: The Capital Development Authority (CDA) faced a loss of Rs848 million by auctioning 29 commercial and residential plots at throwaway prices during the previous government.

A special audit of the CDA carried out a few days ago on the directives of Prime Minister Nawaz Sharif showed that from 2010 to 2012 the civic agency sold out 29 commercial and residential plots even below the reserved prices.

A source in the CDA said the dubious bidding took place at a time when a local PPP leader was calling the shots in the civic agency. “The auction of plots below the reserved prices indicated that the interest of the CDA was not safeguarded while accepting the bids,” stated the audit document (available with Dawn).

When contacted, mayor and CDA chief Sheikh Ansar Aziz confirmed that plots cannot be sold out below the reserved prices. “We are going to hold an inquiry into the matter,” he said.

The document showed that the CDA offered 53 commercial plots for auction held in May 2010, August 2010, December 2010, May 2011, July 2011 and June 2012, and accepted the bids of only 27 plots. It said 13 bids of the commercial plots were accepted by the CDA Board at less than the reserved prices.

The document said the CDA offered 48 residential plots for auction held in August 2010, May 2011 and January 2012 while bids for 45 of the plots were accepted. Out of the 45, the bids of 16 residential plots were accepted at lower than the reserved prices.

Officials in the CDA finance directorate told Dawn that the costing section of the directorate always fixed the reserved price of a plot. This a benchmark below which the plot cannot be sold out, they added.

“The CDA sustained a loss of Rs848 million due to the acceptance of the lower bid prices,” added the audit document, recommending that the matter should be investigated and action taken against the responsible officials.

In response to auditors’ remarks, the CDA stated: “Keeping in view the market trends and previous auction results the CDA Board accepted the highest bids against plots. The Board also considered the recession of real estate market due to critical law and order situation as well devastation caused by floods at the time.”

It added that most of the plots included in the recent auction were either rejected or withdrawn due to the poor response in the previous auctions. This was indicative of the fact that prices of the real estate remained either static or decreased.

Non-cancellation of 524 commercial plots

Another audit document revealed that the CDA was facing a loss of around Rs40 billion due to the non-cancellation of 524 commercial plots.

According to the terms of the allotment letters, the land would be leased out for a period of 33 years and may be extended for two subsequent terms of 33 years each on such terms as may be determined by the authority at the time of the renewal of the lease.

The auditors observed that 524 commercial plots located at the I&T centres, Markaz of Sector G-6 to G-10, fruit and vegetable market 1-11/4, Industrial Area, agro-farming area etc., were allotted in or before 1983 for a period of 33 years, (extendable up to 99 years). As per the terms and condition of the leases, the first term of the lease period has already expired.

However, the auditors said due to non-pursuance of the extension cases the CDA was deprived of millions of rupees in the shape of extension fees.

“The CDA also failed to cancel the 524 plots valuing Rs40.15 billion and re-allot them through open auctions,” the report said, recommending the plots may be cancelled and allotted through open auctions. Besides, action should be taken against the responsible officers of the CDA.

But in its reply, the CDA said notices for the renewal of leases had been issued to the lessees and the leases would be renewed after fulfillment of all the formalities.

Published in Dawn, March 31st, 2017