Policymakers have raised questions over the partnership between Naya Pakistan Housing and Development Authority (Naphda) and the private sector to select the developers for building housing units.
Naphda does not follow Public Procurement Regulatory Authority (PPRA) rules which set guidelines for awarding procurement contracts.
In a recent meeting of the Economic Coordination Committee (ECC), the Naphda chairman briefed committee members on the public-private partnership for building housing units.
He revealed that the Naphda policy board, in its meeting held on February 3, 2021, had recommended the submission of the case for review and approval by the ECC.
He said that the board had sought approval for entering into negotiated procurement under the public-private partnership scheme for the development of low-cost housing units on privately owned pieces of land, pursuant to Regulation 19(2) of the PPP Regulations 2020.
During discussion, Adviser to Prime Minister on Institutional Reforms and Austerity Ishrat Husain supported the proposal. He, however, asked about the safeguards applied to check the credibility of developers.
In response, the Naphda chairman clarified that the requisite safeguards were taken care of in the proposed scheme. However, banks would further scrutinise the developers to ensure their credibility as per their own prescribed criteria, he said.
The privatisation minister emphasised that while implementing the scheme, Naphda must ensure that the selected developers should not have defaulted in the past.
Moreover, some mechanism must be established to put restriction on cost escalation.
The special assistant to prime minister on revenue asked about the application of PPRA rules to the negotiated procurement indicated in the summary. It was clarified that Naphda had approved its own regulations for negotiated procurement under its Act.
The ECC considered the summary submitted by the Cabinet Division titled “Negotiated Procurement for Public-Private Partnership Scheme by Naphda” and approved the proposal.
The Naphda chairman briefed the forum on the facts of the case as reflected in the summary.
The committee was informed that the State Bank of Pakistan (SBP), being the implementing agency, had observed slow pace of implementation and low utilisation of subsidy against the fixed targets.
In view of the observations made by banks, proposals were submitted by Naphda for consideration and approval by the ECC.
Naphda sought revised parameters of the mark-up subsidy scheme for housing finance contained along with key terms and allocation of funds on account of markup subsidy over a period of 10 years with provision/ allocation of Rs177 million in the current financial year.
It also sought allocation of Rs3.110 billion for payment of mark-up subsidy in the next financial year ie 2021-22. The ECC approved the proposal.