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Developer to pay to CDA Rs17.5b in six equal annual installments

The famous One Constitution Avenue of Islamabad has furnished to the Capital Development Authority (CDA) a schedule for payment of Rs17.5 billion in six equal annual installments in six years as per the Supreme Court order handed down on Jan 9, 2019.

Each installment will be of Rs2,916,666,667. Starting from Dec 31, 2021, the installments will end on the same day in 2026. The equal installments have been calculated after reducing Rs1,227,352,500, which the BNP (Private) Limited has already paid to the CDA, documents available with The News showed. The CDA will revive the lease agreement with the BNP. Hundreds of influential politicians, belonging to the mainstream political parties including Prime Minister Imran Khan and other powerful people hailing for various segments of society, had purchased apartments in One Constitution Avenue, which was cancelled by the Islamabad High Court (IHC). However, the Supreme Court restored it and ordered the BNP to pay Rs17.5b to the CDA for revival of the lease agreement. The CDA and BNP have agreed to the payment schedule given by the developer in pursuance of the apex court order. The detailed judgment is still awaited. Of the three judges, who delivered the verdict, two – Saqib Nisar and Faisal Arab – have since retired.

In a letter dated Nov 17 to the Interior Ministry, the CDA’s directorate of audit said the developer has submitted vide his communication of Nov 4 a schedule of payments for Rs17.5b (less amount already paid) in six installments by Dec 12, 2026. Each installment will be covered by bank guarantee of equal amount of the installments as per Supreme Court decision.

Since the Public Accounts Committee (PAC) of the National Assembly has taken cognizance of the matter, the proposed plan is submitted for its information, guidance and instructions if any, the letter said. The PAC has approved the arrangement reached between the BNP and CDA.

The CDA letter referred to PAC wing note dated Oct 23 and said the PAC passed directions in its meeting held on Oct 7: The PAC chairman pointed out that since the National Accountability Bureau (NAB) has clarified that pendency of proceedings before the NAB did not bar the CDA to act according to law. Moreover, no direction has been given by the NAB to the CDA to stop proceedings. The CDA is at liberty to proceed as per directions of the Supreme Court. Therefore, the PAC reiterated that both the CDA and developer should implement the court judgment and may execute a letter or re-adjustment to give effect to the verdict if reviewed subsequently by the apex court.

The CDA letter said that the PAC further directed that directives in compliance of court order be implemented without “ifs” and “buts”. Compliance report was also sought within 30 days.

Accordingly, a meeting between the builder and the CDA was held on Nov 3 and it was decided that the judgment be implemented in letter and spirit subject to the final outcome of the review petition filed by both the parties. The builder agreed to give a payment schedule of the outstanding amounts as per judgment dated Jan 9, 2019. It was clarified that the time limit determined by court will not be extended. In a letter to the CDA, the developer said the NAB has clarified that they do not have any objection for CDA to implement court judgment for revival of the lease agreement in favour of BNP (Private) Limited.

The letter said as discussed and agreed, the total payable to CDA by BNP according to the court order is Rs17.5b (less already paid) within a period of eight years starting from Jan 9, 2019, the date of the judgment, which means that the total amount as decided by the court is to be paid latest by Jan 8, 2027 in equal installments. Since two years have already lapsed awaiting clearance from the NAB, this amount of Rs17.5b will now to have to be paid in six equal installments, which translates to an installment of Rs2,916,666,667 payable at anniversary of each year starting from the date of the revival of lease agreement. Each installment will be secured through an unconditional bank guarantee as per the guarantee draft approved by the CDA through its letter dated Feb 26, 2020.

The apex court’s short order had said that the BNP will pay Rs17.5bln within a period of eight years from today (Jan 9, 2019) in equal yearly installments. An unconditional bank guarantee to secure each installment shall be furnished by the BNP in favour of CDA, which shall have the right to encash the guarantee in case BNP defaults in payment of any installment on its due date. Both parties shall prepare and sign a schedule for yearly payment of installments which shall be deemed to be a part of the original lease. The portion of the land subject matter of the lease on which no construction has been raised so far, and any future construction on such portions shall remain encumbered till the full and final payment due from BNP is made to CDA. The original lease shall stand revived together with all approvals and permissions already granted.

Further approvals/permissions and sanctions shall be processed in accordance with law and shall not be unreasonably withheld. In case BNP commits default in furnishing a guarantee or payment of any installment on its due date, CDA shall have the right, after giving 30 days’ notice to terminate the lease. BNP shall complete the entire project within a reasonable time.

CCP hints at anticompetitive practices of cement manufacturers

The Competition Commission of Pakistan (CCP) on Thursday hinted at anti-competitive practices of cement manufacturers based on records it impounded during an office inspection of their association.

The CCP carried out a search and inspection of the offices of chairman and vice chairman of All Pakistan Cement Manufacturers Association (APCMA) as part of an inquiry launched in May to investigate the possible anti-competitive activities by the cement manufacturers.

Two different teams entered and searched the offices and impounded the relevant record, the CCP said in a statement.

“The impounded record, including Whatsapp messages and emails warranted conducting search and inspection in the south zone as well for obtaining evidence relating to anticompetitive practices,” it said in a statement unequivocal in pointing out unfair practices of cement companies.

“The evidence suggests the possibility of a cartel / collusive arrangement between cement manufacturers.” Previously, the association was dismayed over CCP raids. Cement industry faced huge losses during the last fiscal year and the recent raids are demoralising the industry, said its spokesperson. The inquiry in the cement sector was started based on the information gathered through various media reports, concerns and complaints expressed regarding a concurrent increase in cement prices, particularly in April. The reports showed that an increase ranging between Rs45 to 55 per cement bag was apparently collectively decided in a meeting of the cement manufacturers held under the umbrella of APCMA. In September, the CCP had conducted search and inspection of the APCMA main office and the office of senior vice chairman of the APCMA’s executive committee – a senior employee of a major cement company in Lahore. The CCP said various factors, including lower demand of cement in the first two quarters of 2020 and almost parallel increase in cement prices and data collected from Pakistan Bureau of Statistics and cement companies became the basis of the inquiry and earlier search.

“Sudden rise in price by cement manufacturers at a time when there is low demand compared to the installed capacity of the manufacturers and considering that input fuel cost (coal and oil), transportation and interest rate have declined raises suspicion of collective rise in price by cement companies,” it said.

In July-September, cement sales and exports increased 21.9 percent to 13.6 million tons. Domestic sales registered a healthy increase of 18.8 percent, from 9.1 million tons to 10.8 million tons. Exports also grew 35.7 percent to 2.7 million tons.

The CCP said the cement sector has a history of collusive activities and they have been penalised in the past to an amount of collectively more than Rs6.3 billion on account of forming a cartel. In 2012, the commission initiated an inquiry against cement companies. However, it could not continue due to stay orders by the Lahore High Court.