Unfair rental deals cause govt 23.7m afs loss annually

KABUL (Pajhwok): As a result of unfair rental contracts for shops owned by Afghanistan in Pakistan’s northwestern city of Peshawar, the government suffers a loss of 23.7 million afghanis annually, Pajhwok Afghan News has learnt reliably.

Additionally, the government has not received the rent over the past few months. Amid charges of bribery, documents hint at debt issues between the two sides. However, they want to settle them.

Afghan Building contract

Former King Mohammad Nader Shah, during his trip to Peshawar in 1929, purchased commercial land in the Qisa Khwani area. In 1931, he constructed a structure called Afghan Building on 12 plots of that land.

The Afghan Building has been rented out. Pajhwok has copies of the rental documents, showing that a delegation of the Ministry of Commerce was monitoring rental affairs.

The building was rented out to Syed Abdullah Pacha for two years on July 2, 2003 for Rs61,000 a month.

Based on the contract, the occupant of the building is bound to pay the rent at the end of the month or before the 5^th day of the new month. Whenever the Afghan government plans to construct a new building on the land, the occupant will have to vacate it within a month.

Another part of the contract says tax-related matters will be responsibility of Al Tujari Law Firm associated with the Afghan Consulate in Peshawar.

Another document pertains to the Commerce Ministry delegation’s decision to extend the rental contract. It shows that on April 6, 2006, the delegation decided that the contract shall be extended with an increase of 10 percent in the rent.

The agreement is valid until the government decides to construct a new building at the site. Under the new contract, the rent has been hiked to 67,100 Pakistan rupees.

Shops rented out at 58 times lower rate

The three storey Afghan Building has 33 shops, according to an Afghan Consulate source in Peshawar. But the man who has been rented out the building claims it has 27 shops.

A well-placed Afghan government source in Peshawar agrees the shops have been rented out very cheaply.

The source said currently, one shop in the same locality is given on rent ranging between Rs100,000 and Rs200,000.

Considering these rates, the Afghan Building rent works out at four to five million rupees.

A shopkeeper in Qisa Khwani Bazaar told Pajhwok Afghan News the rent was based on the width and length of the shop. He pays 110,000 rupee for a shop which is four metres long and three metres. The rent of some shops is even higher.

A source in the Afghan Consulate in Peshawar acknowledged that the current rent rate for the Afghan Building was very low. The rate was ordered by former president Hamid Karzai through a decree.

Without going into details, he said: “Shop rents are very low. The government cannot earn a handsome revenue from them. Abdullah Pacha has defaulted on paying the rent in the past…”

Comparing rates in the vicinity of the Afghan Building, one shop is rented out for Rs130,000. Thus the average rent of 30 shops comes to 3.9 million rupees.

This calculation shows the Afghan Building shops have been rented out 58 times cheaper than the current rates in the area.

Under the contract, each shop’s monthly rent is Rs67,100. The contract is valid until the government decides to construct a new building at the site.

If the Afghan Building shops rent promoted to the rates of other shops in the market, government will receive Rs3.9 million (over 2.6 million afs) from the property on a monthly basis — 4.2 million afs annually.

The State Property Law says the rental contract period be specified, but no timeline has been mentioned in the Afghan Building agreement, It is also silent on when a new building will be constructed.

Legal Experts Association deputy chief Subhan Misbah said the government and the people suffered as a result of the current contract. The individual involved should face judicial investigations, he suggested.

He underlined the need for a thoroughgoing probe into the case to unearth the issues involved and resolve them.

Graft claims

The Afghan Consulate source accused Abdullah Pacha of receiving up to 100,000 afs in rent for one shop. However, he never paid the government his rent on time.

The source alleged Pacha offered bribes to Afghan consul-general in Peshawar and other officials. As he frequently hosts hosted different officials at Sheraz Restaurant, nobody dared grill him over the rent payment issue.

Pacha, however, rejected the bribery allegation and said he never committed corruption. He admitted over 10 million rupees were payable by him to the government and that he wanted to clear the dues.

He branded former diplomats as traitors, corrupt and uneducated. He said until 2010, he regularly paid the rent. Later on, one unnamed official asked him to deposit the building tax on his behalf. In this way, Pacha insisted, he had spent more money on the property.

“I spend more money than the amount I should pay in rent. I fought court cases paid fines, taxes and other expenditures. I have asked the officials concerned for the reconciliation of the outstanding rent and related issues, but they never agreed to do so,” he maintained.

Pacha said 27 shops in the Afghan Building had been rented out to him. Six of them have been occupied by Pashtani Bank for a year, six by the Al Tujari Law Firm for six years, six by the Refugee Department for a year and six by the Transport Department for a year. They did not pay the rent either, he continued.

Pacha claimed the Al Tujari Law Firm had received rent from the government for six years but never paid it to him.

Pacha expenses not reimbursed

A letter sent to the Ministry of Foreign Affairs from the Afghan Consulate in Peshawar, dated January 25, reads the Commerce Ministry has not paid the tax on the Afghan Building. Instead Pacha deposited the tax and spent an additional amount of Rs5.5 million on the direction of Al Tujari Firm.

The ministry has not reimbursed Pacha the amount in rent payable. Pajhwok shared the matter with foreign, finance and commerce ministries but they have not yet responded.

This report has been produced by Pajhwok and financially supported by UNDP and Denmark.

nd/mud