Although the government announced plans to pur chase certain houses and apartments for high-ranking government officials and former judges two years ago, nothing has materialised as housing and apartment companies are not really interested. As the government could not begin the bidding process on the stipulated time, the private players have lost interest in the process. While two years ago the real estate sector was facing challenges and looked forward to the plan favourably as a boost to developers, today the environment has also improved to some extent.
The government had issued a public notice for bidding for individual houses on November 28, 2013. It received just one bid -from Civil Homes Phase IV, Dhapakhel, where the price of houses was three times higher than the government's estimation. While the government blamed the private sector for not showing interest in the process, the private sector complains that the government's delayed efforts, unclear and tedious process are to blame for its failure.
Previously, the government decided to buy 25 individual houses and 25 apartments for former secretaries and judges respectively.
“There was only one bidder and the price of the house was three times higher than the government's estimation,“ said Suresh Prakash Acharya, Joint Secretary at the Ministry of Urban Development, adding that they have cancelled the whole process. According to him, the government estimated and planned to purchase eight individual houses within a budget of Rs 100 million in the current fiscal year.
Stating that the private sector did not show any interest in the bidding process, he said, “As we are guided by the Public Procurement Act and Policy 2010, we could not sanction a single bidder.“
Citing that the estimated cost of a house was defined with adequate homework, Acharya said, “We defined average cost of a house after consulting Kathmandu Valley Town Development Authority, Department of Inland Revenue and a private consultant.“ According to the Building Construction Maintenance Division Office (BCMDO), Rs 11 million exclusive of tax was estimated for an individual house.
To fulfill the immediate need of five individual houses for former justices, the government now plans to provide rented houses as temporary remedy. However, the process of renting houses was not taken off as they could not find the required houses. “We found only one house for rent that meets the terms of requirement as accommodation for VVIPs. We are amazed that the private sector is not stepping forward for the process,“ said Kumar Ghimire, Senior Divisional Engineer at BCMDO. “If terms of requirement are hard to meet, the private sector should have discussed in the pre-bid meeting for their demand,“ he said, complaining that they did not even bother to come to ask anything. “Procuring property is very different from purchasing other goods.
The price of the house differs according to location, area of land and type of structure which creates price differentiation,“ he said. “If the ministry introduces a Building Procurement Work Plan, all related problems can be sorted out and the process can take pace within this fiscal year,“ he added.
Ichhya Raj Tamang, Chairman of Civil Homes, said, “The government cancelled the whole process of purchas ing readymade house as our products were high in cost and size,“ adding that the cost of a single house was Rs 25 million. Stating that the price of the house differs due to location, finishing quality, floor area, internal fittings and others, he said, “Offering the tender to the lowest bidder may not be appropriate when trying to purchase readymade houses, so the government might need to amend the procurement policy.“
“The process was tedious, complicated and unclear,“ said Tamang, adding, “The government's complicated policies and legal procedures may be the reason housing companies were reluctant to bid.“ He added, “If only the process was more simple and practical, the implementation of the government's decision to purchase property would have been possible.“
Narendra Bajracharya, Director of The Comfort Housing, said that they did not bid as they did not find it feasible. “The whole process was too complicated and delayed and most private players were not confident about the process, which is probably why many didn't even bothered to bid.“ He also informed that the product specifications required by the government did not match those existing or planned by private developers.
source: the himalayan times