City to increase market rents to pay staff on time

KMC aims to double revenue from Rs70 million to make ends meet.

KARACHI: A cash-strapped Karachi Municipal Corporation (KMC) is looking to increase the revenue it generates by 100% by getting the 69 markets it controls to pay more rent, so it can pay its staff on time.

“We earn around Rs70 million a year,” said a KMC official. “I know this is nothing compared to the amount paid by the same number of shops, but our target is to reach at least Rs140 million now.”

The KMC owns 69 markets with over 9,000 shops rented out at an average of Rs3,500, which is well below the commercial rates set by private owners. The markets include Lea Market, Soldier Bazaar, Empress Market and Super Market in Liaquatabad. The shops also include small stalls which sell meat and cigarettes and pay between Rs250 and Rs4,000 in rent.

The proposal has been pending since the 2001 local government system was abolished, said KMC official from the real estate department. “The rent was increased twice before as well - once in 1999 by 100% and then in 2006 by 50%. Another raise was long overdue.”

But the official thought that the move would have little impact on shops that already pay low rent. “Some tenants pay us Rs300 and Rs750,” he explained. “So it really doesn’t matter [even if that is doubled].”

The markets which KMC controls were originally built for the people who were unemployed. But with the passage of time they have become the busiest commercial centres in the city.

Meanwhile, KMC struggles to provide municipal services to a city of over 18 million people. The main sources of income are sales tax, property transfer charges and a billboard tax. Another source is charged parking but that revenue seems to vanish into thin air and KMC has yet to find a way to tighten the flow of this cash. “Charged car parking alone can meet all of our expenses,” said another senior official. “But no one knows for sure how much the local administration earns or where the money is going.” Officially, there are just a few charged parking areas in the city, he said. “But even there, the contractors charge more than the authorised rate and not a rupee comes to us.”

Published in The Express Tribune, December 20^th, 2011.