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Faulty policies have endangered local and foreign investment in the construction industry, virtually halted due to terrorism, economic crunch, political uncertainty, and lack of investors' confidence in the government.

Presently only one mega construction project involving foreign investment is under way in the heart of the capital – the residential-commercial-hotel complex Centaurus. A similar project to be commissioned near Jinnah Convention Centre could not start due to 'unrealistic' and 'faulty' policies and decisions of the Capital Development Authority (CDA).

The negligence of the cash-starved authority has compelled the Board of Investment (BOI) to intervene and safeguard over $350 million investment of Saudi firm Al-Tamimi and the local company, Pak-Gulf Constructions, in Centaurus, which will house a seven-star Hilton Hotel in sector F-8.

The second seven-star Grand Hyatt, in a multi-purpose complex, near Jinnah Convention Centre by a group, BNP, could not take off mainly because of height restriction imposed by the Civil Aviation Authority (CAA) despite the fact that the CDA's agreement stated, “sky is the limit”, permitting unlimited number of storeys to the building designed by the BNP.

For both complexes, the CDA failed to meet its commitments made at the time of auctioning plots that fetched the highest ever bids of Rs4.8 billion for Grand Hyatt and Rs6.5 billion for Centaurus in 2005.

Today five years on, the civic agency still seems to be non serious in providing adequate supply of electricity, water, and sewage system. Most important is a CAA permission to allow at least onetime waiver in height restriction. The number of storeys required by the two complexes is higher than the height permissible in CAA rules.

The city managers have decided to seek help of Prime Minister Yousuf Raza Gilani to get onetime waiver in CAA laws for two under construction 7-star hotels, allowing them to build up to 500-feet (45 storeys), according to their approved plans.

The CAA enforced height restriction few months ago as it felt the 500 feet height would block view of pilots landing and taking off planes at and from Benazir Bhutto airport. However, in many developed counties there are sky-high buildings and no such restriction is imposed.

“First the CDA will approach the Ministry of Defence and then a summary would be sent to the prime minister for getting onetime waiver,” a senior official of the authority said.

Under CAA laws the maximum permissible height within 15km radius is 500 feet and the federal capital falls within the restricted zone. However, Margalla Hills having the highest peak of over 3,000 feet is also located in the same zone.

When the projects were advertised in the media, the CAA did nothing to mention the height restriction. “Unfortunately no air nautical survey of Islamabad had ever been conducted by the CDA. Nobody knows the exact skyline for high-rise buildings,” a senior official of the CDA said.

One of the owners of BNP, Hafez Sheikh, has said if the CAA restriction was implemented, the 45-storey hotel would be reduced to 30 storeys.

One of the main problems besetting the two projects is non-availability of adequate power supply, for which the CDA did nothing during the last five years, since the signing of the agreements in 2005.

But finally after intervention of the BOI, the city managers have allocated a piece of land in Fatima Jinnah Park for installing a grid station to provide electricity to 'Centaurus Tower'. The $350 million 37-storey tower comprises a mega mall, luxury apartments and penthouses, corporate offices and a deluxe hotel.

However, source in the CDA said the authority, facing acute financial crisis, could not bear the cost of the grid station, adding it was not taking practical measures to provide facilities to the complex promised in the agreement signed four years back.

The Centaurus complex is reportedly 65 per cent complete as the structures of three residential and commercial towers have been built. As the CDA had failed to provide electricity, the developers used six power generators of 1000KVA each to meet the requirement. The construction firm has asked the CDA to pay the amount they spent on running the six powerful generators.

The owners of the complex have told CDA bosses that they could bear cost of installation of the grid station provided the amount was deducted from the cost of land the company has to pay to the CDA in 15 years.

In January this year, the towers management had informed the civic agency that they need around 16 megawatt electricity to energise the multi-storey building. The owner of Centaurus, Sardar Tanvir Ilyas, said the restriction would badly affect the foreign investment in his project.

A local investment of over Rs1 billion in Northern Strip project in a new commercial centre in sector E-11 having residential and commercial plots is also facing uncertainty due to CDA's faulty decision-making. It compelled the Supreme Court to take a suo moto notice.

This investment has been made by Multi-Profession Cooperative Housing Society (MPCHS), which won the contract in 2008 after successfully completing a housing project in E-11. The project is said to be the first public-private-partnership between the CDA and a private party in Islamabad.

Under the agreement, the housing society has got vacated CDA's 54 acres land in northern side of Islamabad between sector E-11 and Margalla Hills from encroachers. It reportedly paid over Rs900 million for compensation and Rs190 million in development cost. The plots to be carved out in strip would be shared by the housing society and the CDA according to 43-57 per cent formula.

The CDA has not spent even a single penny on the project. Its saleable area would be shared by the CDA and MPCHS under 20.52 and 15.46 acres formula. Approved by the present and former chairmen of the authority, the project may open up many stalled residential sectors in Islamabad through the same formula.