Bureaucrats can now buy official cars, for peanuts
Government gave civil servants from grade 20 to 22, option to purchase cars allocated to them on depreciated prices.
ISLAMABAD:
Toyota Corolla, 2006 model, well maintained. Asking price: Rs330,000.
The offer above is not a fluke. It is made by the government to top bureaucrats, under its monetisation of transport facility policy recently approved by the prime minister.
Under the policy, the government has given civil servants, from grade 20 to 22, the option to purchase cars allocated to them on depreciated prices.
The policy was formulated in light of revelations that top civil servants were using more cars than designated to them, and causing billions of rupees in loss to the exchequer on account of fuel expenses.
Benevolence of accounting
So how does a 2006 Toyota Corolla come down to one-third its market price in five years? The benevolence of accounting tricks.
Depreciation, a standard accounting practice, slashes the value of an asset on account of its physical wear-and-tear. There is no standard depreciation formula though, and each organisation can formulate its own, as long as it keeps it consistent.
Under the new rules, the government has changed its rules of depreciation.
From an earlier policy of depreciating 15% in the first year, and 10% in subsequent years, the government has allowed for 15% depreciation for each year of the vehicle’s life.
According to the new formula, therefore, a 1300cc car purchased in 2006 at Rs870,000 will have a depreciated value of Rs330,000 on January 1, 2012.
Market value of a similar car, of course, is much higher. “A well-maintained 2006 Corolla is available in the market for about Rs1 million, while one in an average condition is available between Rs900,000 and Rs950,000,” said Raja Safeer, owner of an automobile showroom in Islamabad.
Other perks
The bureaucrats would not only get the cars at a deeply discounted price, they have also been allowed to pay the amount in monthly installments. Monetisation rules state, “the recovery of installments of the depreciated price of the vehicle shall be fixed at no less than Rs 25,000 per month.”
They can also hire official cars at a nominal rate of Rs3.6 per kilometre, according to the rules. While the government had initially announced that after trading in cash for cars, officials would be responsible for their own transport, the new rules states that “one 1300cc vehicle will be maintained for protocol/operational duties by the entitled officers.”
Interestingly, secretaries of the divisions and ministries have been tasked to certify that officials who have opted for monetisation policy are not using project or departmental vehicles. The secretaries themselves, however, have been found misusing three to four vehicles.
Published in The Express Tribune, December 21st, 2011.
Toyota Corolla, 2006 model, well maintained. Asking price: Rs330,000.
The offer above is not a fluke. It is made by the government to top bureaucrats, under its monetisation of transport facility policy recently approved by the prime minister.
Under the policy, the government has given civil servants, from grade 20 to 22, the option to purchase cars allocated to them on depreciated prices.
The policy was formulated in light of revelations that top civil servants were using more cars than designated to them, and causing billions of rupees in loss to the exchequer on account of fuel expenses.
Benevolence of accounting
So how does a 2006 Toyota Corolla come down to one-third its market price in five years? The benevolence of accounting tricks.
Depreciation, a standard accounting practice, slashes the value of an asset on account of its physical wear-and-tear. There is no standard depreciation formula though, and each organisation can formulate its own, as long as it keeps it consistent.
Under the new rules, the government has changed its rules of depreciation.
From an earlier policy of depreciating 15% in the first year, and 10% in subsequent years, the government has allowed for 15% depreciation for each year of the vehicle’s life.
According to the new formula, therefore, a 1300cc car purchased in 2006 at Rs870,000 will have a depreciated value of Rs330,000 on January 1, 2012.
Market value of a similar car, of course, is much higher. “A well-maintained 2006 Corolla is available in the market for about Rs1 million, while one in an average condition is available between Rs900,000 and Rs950,000,” said Raja Safeer, owner of an automobile showroom in Islamabad.
Other perks
The bureaucrats would not only get the cars at a deeply discounted price, they have also been allowed to pay the amount in monthly installments. Monetisation rules state, “the recovery of installments of the depreciated price of the vehicle shall be fixed at no less than Rs 25,000 per month.”
They can also hire official cars at a nominal rate of Rs3.6 per kilometre, according to the rules. While the government had initially announced that after trading in cash for cars, officials would be responsible for their own transport, the new rules states that “one 1300cc vehicle will be maintained for protocol/operational duties by the entitled officers.”
Interestingly, secretaries of the divisions and ministries have been tasked to certify that officials who have opted for monetisation policy are not using project or departmental vehicles. The secretaries themselves, however, have been found misusing three to four vehicles.
Published in The Express Tribune, December 21st, 2011.