NAB Probes Sindh Civic Officials Over Misuse of Builder Fees

In a renewed move to resolve the ongoing dispute over the utilisation of betterment charges collected from builders, the National Accountability Bureau (NAB) has summoned key officials from Sindh’s civic bodies in Hyderabad. The inquiry revolves around allegations of mismanagement and improper distribution of these infrastructure development fees.

A NAB investigation team, led by Additional Director Fayaz Hussain Abbasi, will be in Hyderabad from July 9 to 11, where they will question officials and visit the offices of relevant departments. A formal letter issued on July 3 by Deputy Director Coordination Sanaullah was sent to top representatives of the Sindh Building Control Authority (SBCA), Hyderabad Municipal Corporation (HMC), Hyderabad Water and Sewerage Corporation (HWSC), and Qasimabad Municipal Corporation (QMC).

The summoned officers — including SBCA’s Regional Director, HMC’s Chief Municipal Commissioner, HWSC’s CEO, and QMC’s Municipal Commissioner — have been instructed to present complete records related to the collection, sharing, and utilisation of betterment charges from 2011 onwards. NAB has warned that failure to comply could lead to prosecution for obstructing the investigation.

This inquiry comes amid a prolonged dispute between government civic agencies and real estate developers over the rightful allocation and usage of betterment funds — a fee charged from builders for improvements to infrastructure like roads, water supply, and drainage.

Historically, under an old formula, SBCA collected the charges and retained 25%, while 55% was handed to HMC, and 20% to the former WASA, now operating as HWSC. However, a revised distribution formula was proposed in 2021 after recommendations by former Deputy Commissioner Fuad Ghaffar Soomro, and subsequently endorsed by the Sindh High Court.

According to the new notification issued on July 19, 2021, SBCA’s share was reduced to 10%, with 60% allocated to HWSC and 30% to HMC. The revised formula aimed to align the allocation with the actual responsibilities of the agencies — particularly since HWSC is directly responsible for water supply and drainage, while HMC’s role in these services is minimal.

The Association of Builders and Developers (ABAD) has long supported the idea that HWSC should receive the lion’s share of the funds, arguing that HMC benefits from the levy without directly contributing to infrastructure services in many new construction areas. Builders frequently complain that although they pay hefty fees under the betterment levy, basic services like water supply and drainage remain neglected, largely due to HWSC’s claims of funding shortages.

Despite the Sindh High Court’s decision and government notification, implementation of the new formula has been stalled. As a result, residents and businesses in newly built commercial and residential properties are bearing the brunt. Many suffer from frequent water shortages and poor drainage, even as Hyderabad lies in close proximity to the Indus River and three canals.

The NAB inquiry seeks to uncover why the revised policy hasn’t been executed and whether there has been misuse or diversion of public funds collected under the betterment levy.