CDA terminates land lease agreement of Grand Hyatt

The five-star hotel is under construction on the Constitution Avenue, Islamabad. PHOTO: RIZWAN SHEHZAD/EXPRESS

The five-star hotel is under construction on the Constitution Avenue, Islamabad. PHOTO: RIZWAN SHEHZAD/EXPRESS

ISLAMABAD: The Capital Development Authority (CDA) has terminated the “controversial” land lease of the under-construction Grand Hyatt Hotel on the Constitution Avenue.

CDA counsel Kashif Ali Malik told Islamabad High Court (IHC) judge Mohsin Akhtar Kayani that the civic agency board has cancelled the 99-year lease agreement with the BNP (private) Limited.

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On July 1, the Capital Development Authority (CDA) had sealed the under-construction Grand Hayat Hotel — owned by the BNP (Pvt) Limited — for various building and layout plan violations.

The CDA counsel maintained that BNP (Pvt) Limited created third party interest without adhering to the CDA by-laws.

A report submitted earlier by the CDA revealed that the first bidding for the construction of the five-star hotel was cancelled on August 2, 2004, while the CDA started the auction process again on September 28, 2004.

The report said that certain changes were made (on CDA’s part) in the terms and conditions of the auction including the extension of the original lease period from 33 years to 99 years, reducing payment of initial bid money from 25 per cent to 15 per cent within 45 days and the balance payment within 15 years instead of 120 days.

On March 9, 2005, the CDA auctioned the 13.5-acre plot to the BNP Group for Rs4.88 billion. The CDA Board, however, handed over the possession of the plot in 2005 after receiving only Rs800 million.

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The BNP has paid the CDA Rs1.02 billion while the remaining Rs3.85 billion was recoverable in installments until 2026.

Earlier, the Public Accounts Committee noted that the BNP Group earned over Rs3 billion in profits from selling residential units while the CDA did not receive even half of the total sum.

The report said that BNP Group – comprising Bismillah textiles (Pvt) Ltd, Niagara Mills (Pvt) Ltd, Paragon City (Pvt) Ltd and Belhasa International Company LLC) – was pre-qualified along with six others. It added that as per the BNP Group memorandum of understanding Lt-Gen (retd) Tauqir Zia was designated as the chief executive while Abdul Hafeez Sheikh as the contact person for liaison with the CDA.

The report said that the BNP Group that participated in the bidding process, and it was issued an offer letter by the CDA, did not sign the lease agreement with the CDA. It said that the CDA offered the plot to BNP Group but signed the lease agreement with another company called Elite Fashion, a subsidiary of Bismillah Textile, which was renamed as BNP (Pvt) Limited on May 2, 2005.

The report said that the construction was to be carried out within a period of three years from the date of approval of the building plan, however, no construction was carried out at the site. On May 5, 2006, the BNP (Pvt) applied to the CDA for rescheduling of payment on grounds that due to the earthquake in October 2005 the project was put on standstill. Subsequently, the CDA Board approved the payment rescheduling on 16, 2007.

The plans of the ‘Hotel Tower’ were approved for two to 47 storey(s), service apartments with a height of 710 feet for the hotel tower, however, the Civil Aviation Authority objected to the height of the building and it was restricted to 330 feet height.

The CDA report said that the BNP (Pvt) Limited made post-bid changes as well as other gross illegalities, building plan violations, adding that it sold out the apartments without obtaining any approval from the CDA. It said that the BNP (Pvt) Limited has constructed 120 apartments (in each tower) in violation of the approved building plan which allowed only 60-service apartments in each tower.

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