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EOBI losing Rs10bn a year due to unfinished projects

ISLAMABAD: The Employees Old Age Benefits Institution (EOBI) is losing Rs10 billion in revenue a year due to 18 incomplete mega development projects.

Under the PPP government, the EOBI embarked on an ambitious, Rs20 billion plan to construct offices, commercial buildings and hotels in Islamabad, Lahore, Karachi and Sialkot.

The institution hoped such investments would offer future returns through rent, and increase in value over time, compared to putting funds in stocks and banks that offer lower returns.

The revenue generated would enable the EOBI to give pensions to hundreds of thousands of people employed by the private sector.

However, nearly four years ago – soon after the plan was launched – the PML-N led EOBI administration stopped funding these projects, at a time when most of the structures – including a commercial complex with a multi-screen cinema and an Overseas Employment Corporation building in Islamabad and a Serena Hotel building in Lahore – were more than halfway complete.

Documents available with Dawn show that the EOBI has spent Rs10 billion on the construction of these buildings, and approximately Rs9 billion more are needed to complete them.

On Dec 31, 2016, the PRIMACO general manager Syed Mahmud Khalid lodged a complaint with the Ministry of Overseas Pakistanis and Human Resource Development urging the government to save the EOBI from huge annual financial losses, which have accumulated to nearly Rs40 billion over the last four years. PRIMACO is a subsidiary of the EOBI and is overseeing these projects.

According to Mr Khalid, work did not begin on these projects despites orders from then Supreme Court judge Saqib Nisar in February 2015 to complete what the EOBI started four years ago.

Documents show that in its 2015-16 report, the Public Accounts Committee also directed the EOBI to complete these projects in the interests of the pensioners.

EOBI Director General Investment Mohammad Riazuddin, the official behind the institution’s financial affairs, explained that most projects were tilted in the favour of the contractors awarded the projects.

He said the delays in the projects’ completions are due to disputes with some of the contractors. “Some contractors have gone into litigation against the EOBI. The issue will be decided by the court,” he said.

However, he conceded that the projects have been delayed and the EOBI is incurring losses every day.

“Some smaller projects have been completed following the SC’s orders. It is our priority to complete the remaining projects to start generation revenue,” he added.

The EOBI has been investing in commercial and residential properties for over three decades.

According to documents, the institution began investing in commercial, industrial and residential properties throughout the country, from Karachi to the northern areas, in 1982. The EOBI has been buying properties for value addition reasons.

The funding to invest in property comes mostly from over 450,000 contributors employed by the private sector, from the labour force to executives. Since 1973, the EOBI has collected Rs90 billion from contributors and distributed Rs70 billion in pensions amongst its contributors to date.

Today, the institution’s assets measure over Rs238 billion, including Rs150 billion in cash.

Courtesy : Dawn News

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