The Punjab government established the Punjab Land Development Company (PLDC) to launch the housing scheme. According to the plan, Ashiyana schemes will have 3-marla homes priced at Rs840,000 and 5-marla houses priced at Rs1,190,000. Buyers will need to deposit monthly instalments of Rs4,500 and Rs7,500, respectively, for these units. Only individuals with monthly incomes of less than Rs20,000 are eligible to apply. The buyers must fill a form provided by the PLDC and submit it with a processing fee of Rs890 at the Bank of Punjab. The buyers will be selected via lucky draw. The project will Initially be started in Lahore and later be expanded to other districts of the province.
The terms and conditions regarding the provision of state land for the project are unclear, as the Punjab government hasn’t decided whether to provide the land for free or at a subsidised rate.
If the government intends to provide state land free to the PLDC, it must legislate accordingly. If the government chooses to subsidise the land, the project cost could multiply. Also, even with a subsidy, the cost of the housing units may rise beyond the reach of the poor people that it seeks to accommodate, an official said.
The Revenue Department provided 712 kanals to the PLDC to start the first phase of the project without making the relevant legislation and as such the transfer of land was illegal, the official said.
The Revenue Department has also identified 556 kanals of state land worth Rs2.28 billion in Sahiwal district for the Ashiyana project.
In November 2009, the Punjab government identified over 1,400 commercial, residential and agriculture properties that it could sell to raise Rs12 billion and ease its financial burdens.
In order to do this, it passed the Punjab Privatisation Board Act of 2010. The board was entrusted with the responsibility to enter into agreements, acquire, hold, manage and dispose of property and to sue and be sued in its name. Likewise, the government must now legislate for the award of land to the PLDC, otherwise the transfer of land to the commission could be considered illegal.
The Punjab government initially provided a Rs250 million loan at 0.25 per cent interest to the PLDC, repayable in five years with a two-year grace period to initiate work on the project.
Now the PLDC has demanded more funds, but the Finance Department has responded that the company would first need to provide a business plan of the project to decide the mode of payment of the loan. This issue has not yet been resolved, though the government has launched the project amidst heavy publicity.
The official said that this project would involve private transactions between the company and those allotted houses, and the government could not become a guarantor in such private deeds. The award of contracts for development and construction work has also not been decided yet.
PLDC chairman Sheikh Allauddin admitted that some core issues were yet to be decided. He vowed that the process would be transparent and legislation would be done if necessary.
The PLDC has already received 19,000 applications for houses and these will be processed on merit for award of allotments, he said. The pre-qualification of contractors would be assessed on merit too, he said.
Published in The Express Tribune, January 30th, 2011.
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