ISLAMABAD, May 9: The Capital Development Authority (CDA) has bypassed proper approval channels to charge additional development cost from the allottees of sector D-12, although it has a gross profitability of Rs1.9 billion, investigations by Dawn show.
It sought authorization of President Gen Pervez Musharraf for levying additional charges before the same were approved by the Executive Committee of the National Economic Council (Ecnec).
The CDA, records showed, filed an appeal before President Musharraf against the decision of the federal ombudsman, who had specifically directed the authority not to charge additional development charges from the allottees.
“The president was given a wrong picture that the CDA was incurring a loss and, therefore, the increase in price was necessitated,” sources said.
After permission for charging increased developmental cost was accorded by the president, the project was submitted to Ecnec which rubber-stamped the president’s decision, they said.
According to standard procedures, Ecnec is the decision making-body for approving developmental projects, and summaries are not sent to the forum after approval of the president.
When contacted, CDA spokesperson Rawal Khan Maitla, rejected the allegation that the authority painted a false picture to the president for getting his approval. “Actual figures were given to him, based on the calculations done by the finance department,” he added.
In response to the objections raised by the relevant authorities on charging additional development cost, the CDA had maintained that a case against the judgment of federal ombudsman was referred to the President Secretariat for decision.
Records showed that the Central Development Working Party (CDWP) and Ecnec, while approving the project, had questioned the authority’s decision to charge additional development charges.
A CDWP meeting had observed: “It is, therefore, for consideration whether the CDA needs to recover additional surcharge from the old allottees of Sector D-12 or not.”
The Ecnec, before approving the project, also noted: “The issue is whether the CDA should recover additional amount of Rs520 million as additional surcharge despite a substantial surplus.”
The authority was also asked to reconsider recovery of additional surcharge from old allottees in view of sizable surplus. However, the decision to recover the additional surcharge at the rate of Rs650 per square yard was not revised.
According to official documents, the gross profitability of the project is estimated at RS1.9 billion with a net profit of Rs1.5 billion. The CDA is expected to receive Rs4.03 billion as total recoveries with an estimated amount of Rs2.06 billion as development cost.
The CDA launched the D-12 project without making necessary arrangements to complete it which resulted in colossal increase in the cost.
The Rs788 million project was originally approved in 1988, but the work could not be commenced due to non-availability of land. In May 2001, the authority submitted a revised Rs3.196 million PC-1, showing an increase of Rs2407.816 million or 405 per cent.
Later, the project cost was again revised and shown to be Rs2067 million. The rehabilitation benefits amounting to Rs447 million were excluded from the cost.
The capital cost of D-12 includes Rs267 million for land acquisition and compensation for built up property, and Rs1,271 million for direct development expenditures. The indirect costs amounting to Rs262 million were worked out on cost-sharing basis.
The sector was opened in 1989 and applications were invited for allotment through balloting. Out of a total of 3,445 plots, 2,595 were allotted, and Rs645 million, including a mark-up of Rs172 million, have been recovered by the CDA.
The authority has incurred an expenditure of Rs248 million on land acquisition, possession and compensation for built up property.
The sources said a committee, constituted under secretary planning and development with representatives of ministries of interior, housing and works, and the CDA, was given the task to rationalize the costs.
The committee, they said, decided that the rehabilitation benefits given to the original land owners in the form of residential plots and agro farming plots should be valued at market prices and treated as the cost to be recovered from the allottees of sector D-12.
The old allottees have termed the CDA’s decision to charge additional development cost as violation of the agreement.
The brunt of the cost increase would be borne mostly by the government employees, who were allotted plots in the sector, and many of whom expressed their inability to bear the burden as a result of the authority’s inordinate delays in executing the project in time.
The project is now expected to take another three years for completion.