HYDERABAD: Hyderabad Municipal Corporation (HMC) administrator has painted a bleak picture of the corporation’s financial position and urged finance department to release Rs25 million per month in addition to existing grant as budgetary support for employees’ expenditures and suggested the government clear HMC’s liabilities amounting to Rs561.437m as one-time support.

Administrator Altaf Hussain Sario informed local government department in a letter dated June 11 that according to verification by Local Fund Audit Hyderabad, an amount of Rs2.616 billion was not paid to HMC between July 2009 and Dec 2019.

“Admittedly though financial mismanagement and failure to exploit local income sources also contribute to accumulating liabilities but [payment of] inadequate share of Octroi zila tax (OZT) by Sindh government is also to blame for it,” said the letter addressed to secretary of local government.

Mr Sario presented break-up of expenditures and HMC’s income and said: “HMC has been facing a severe adverse financial situation for many years, causing huge liabilities resulting in regressive effects on routine execution of its functions. It has also caused inordinate litigation and continuous distress to employees due to failure to pay regular pension, commutation and gratuity timely,” said the letter.

He calculated liabilities of HMC until June 4 at Rs561.437m, which included payment of liabilities of contractors and suppliers and contingencies bills till June 30, 2016 (Rs60.117m), liabilities of contractors and suppliers and contingencies bills till June 30, 2020 (Rs152.076m), liabilities of contractors and suppliers and contingencies bills till June 4 (Rs107.683m), liabilities of retired and deceased employees in respect of commutation, gratuity, pensions, family pension and restoration of commutation portion till May 31 (Rs175.649m), liabilities of salary of staff of union council Seri from June 2019 to May 2021 (Rs48m) and liabilities of municipal employees towards difference of pay, encashment of leave preparatory to retirement, financial assistance and medical reimbursement amounting to Rs17.910m.

He said that apart from accumulating liabilities, routine tentative monthly expenditure of the corporation was ever growing due to increase in salaries from time to time as per government announcements and pension expenditure, which had been worked at Rs146.350m as monthly expenditures.

The corporation’s approximate monthly income and OZT share from government and its own sources was Rs131.342m, showing a monthly deficit of around R15m or Rs0.5m per day, he said.

He said that HMC had been regularly corresponding with the LG department and Sindh government on this count. Undoubtedly, he said, the HMC needed to fully exploit all its resources for income generation but existing liabilities necessarily required additional funds from the Sindh government.

He had given four proposals to LG department and said that Sindh government should be requested to release the amount to HMC deducted from OZT share (Rs2.616bn) during abovementioned period to clear all liabilities.

In his second suggestion, he said the Sindh government should be requested to assist HMC in one-time clearance of accumulating liabilities amounting to Rs561.437m from outside the budget and in his third proposal he said that “if the above options are not possible then vital liabilities related to employees amounting to Rs24.156m be allocated from any appropriate head of budget with the finance department”.

In his last suggestion he said that if the finance department was unable to release the requested additional amount at once then at least Rs25m per month be added to the existing grant for budgetary support for employee-related expenses.

As for liabilities of UC Seri’s staff, HMC was unable to clear them because the staff had been merged into HMC by the government. It was not on actual strength of HMC but “this has become an additional burden on HMC,” said an official.

“These payments are to be cleared by Sindh government because HMC doesn’t get additional funds for payment of salaries to Seri’s staff whereas HMC meets expenses of salaries of its own actual employees hardly through its OZT share,” he said.

UC Seri’s employees moved Sindh High Court where finance department had made a statement before the court that HMC met OZT share for payment of salaries thus came court’s directive that HMC had to pay salaries of UC Seri’s staff out of its own resources.

But the incumbent administrator has moved an application before court, submitting before it that the finance department was initially paying additional funds for payment of these employees’ salaries which have been stopped with the result that employees’ liabilities have accumulated to Rs48m.

HMC is supposed to get enhanced share under OZT — abolished during Nawaz Sharif’s second government — and it did not get that share as per enhancement. “This year again salaries have been raised by Sindh government but if share of HMC under OZT’s head doesn’t commensurate with raise in pay, it will lead to financial trouble for corporation,” he said.

Recoveries, prolonged postings

HMC’s employees and officers posted there for a long time were unable to improve recovery of their rent towards properties and payments from contractors. Rather, contractors were given concessions that led to accumulation of liabilities, said sources.

Outgoing municipal commissioner Zahid Hussain Khwaja cleared liabilities of Rs40m in this month although the then mayor Syed Tayyab Hussain declined to clear liabilities of contractors towards contingencies and other bills amounting to Rs60m.

And then outgoing administrator also declined to pay the dues as these expenses were seen in HMC until June 2016 (as referred above by administrator in letter). But municipal commissioner surprisingly did it, according to HMC officials.

Published in Dawn, June 18th, 2021