FAISALABAD, July 6: The city Tehsil Municipal Administration has faced a serious financial setback when the Punjab government cancelled building fee contract worth Rs87.5 million on finding violation of rules.

The TMA had awarded the contract for the collection of building and debris (malba) fee on immovable property for 2004-05 to SY Corporation through Shabbir Husain of Chak 203-RB.

The contract was awarded for Rs31.2 million in 2003-04. The TMA received Rs1.5 million as advance from the contractor despite the fact that the Punjab government had imposed a ban on awarding contracts of water rate, building fee, sanitation fee, license fee and lighting rate by auction under the Punjab Local Government (Collection Rights) Rules, 2003.

The DCO jumped in the matter and issued a circular to all the TMOs stopping them from awarding contracts which were prohibited under the rules. The TMA rejected all instructions of the government as well as DCO claiming that the contract had been awarded in the larger interest of the public.

The Punjab government took stern action on this move of the TMA and ordered cancellation of building fee contract declaring it illegal. The TMA insiders told this correspondent on Tuesday that the private firm run by an influential person of the city who had obtained the contract of building fee was also hesitating to get the contract formally which could be judged from the fact that he refused to deposit Rs3 million to the TMA.

The contractor was aware that it would be impossible for him to collect such a huge amount due to which he preferred to drain out Rs1.5 million instead of loosing millions of rupees after contract matured.

They claimed that in the light of instructions from the government, the TMA would have to collect the building fee on its own and it would be impossible for it to collect even Rs25 million.

The TMA had allocated a huge fund of Rs659 million for the development with the hope of getting Rs87.5 million from the collection of building fee. Meanwhile, the TMA formally handed over the contracts for the collection of fee on transfer of property rights for Rs85 million to Hayat Associates through Rana Hayat.

It may be noted that the contracts of building fee and transfer of property rights fee had been awarded to two different 'influential persons' by the TMA for a record amounts due to personality clash between the two.

Similarly, a row had been going on between the administration and the TMA over the award of building fee contract for the last fortnight. When contacted, TMO Rai Muhammad Amin Khan said the contract had been cancelled due to non-payment of Rs125 million by the contractor. The TMA would give the contract afresh through a tender, he added.