Audit finds HDC facing MVR 16 billion loss from free land scheme
The Binveriya scheme was introduced by the previous administration to provide land plots in Hulhumalé to residents of Malé.
A special audit report released by the Auditor General’s Office has found that the Housing Development Corporation could lose up to MVR 15.93 billion in potential revenue due to land allocated under the Binveriya housing scheme.
The Binveriya scheme was introduced by the previous administration to provide land plots in Hulhumalé to residents of Malé.
According to the report titled “Special Audit Report on the Financial Loss Incurred by HDC Due to Land Plots Allocated from Hulhumalé Under the Binveriya Scheme”, a total of 1,408 plots were allocated to 4,120 beneficiaries in Hulhumalé Phase Two and Phase Three.
The report states that:
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The total land area allocated under the scheme amounts to 2.8 million square feet
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HDC’s estimated future revenue loss ranges between MVR 14.85 billion and MVR 15.93 billion
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HDC also surrendered 563,642 square feet of land previously reserved for utility services and infrastructure development
The audit warned that the loss could create financial pressure on the company.
“Due to this financial loss, there is a notable financial risk that the company's operational expenses may become unsustainable and that HDC may have to rely on the state budget to meet its debt obligations,” the report stated.
The audit further noted that the allocation of land had created difficulties for the implementation of Hulhumalé’s development master plan.
According to the report, the estimated cost per beneficiary under the Binveriya scheme is approximately MVR 3.9 million.
Each beneficiary received an average of 690 square feet of land in Hulhumalé.
The audit compared the scheme with other state housing projects, stating:
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The cost per beneficiary is 70 per cent higher than the Hiyaa flat project
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The cost is 63 per cent higher than the Gedhoruveriya housing scheme
The report also noted that beneficiaries of Hiyaa and Gedhoruveriya are required to pay monthly rent, while land recipients under Binveriya received plots without payment.
To offset losses linked to the scheme, the government signed a compensation agreement with HDC in January last year valued at MVR 5.4 billion.
The compensation package included:
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Land from Ras Malé valued at MVR 3.8 billion
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Tax deductions worth MVR 734.7 million through Maldives Inland Revenue Authority
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Loan deductions amounting to MVR 792.2 million from liabilities owed to the Ministry of Finance
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Waivers of MVR 100.7 million in loan interest and penalties
However, the audit stated that the compensation package does not provide direct cash income to HDC.
The report noted that Ras Malé is a reclamation project that will require time before generating revenue and stated that land values there may not match prices in Hulhumalé.
The Auditor General also stated that no prior study had been conducted to assess the financial impact of the scheme on HDC or determine compensation requirements before implementation.
The report concluded with four recommendations:
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Review and revise the compensation payable to HDC
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Implement HDC’s original Hulhumalé master plan
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Consider the financial impact on state-owned enterprises before implementing future policies
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Complete the legal registration of 2,886 square feet of land already transferred to the Housing Ministry
