Rajen Seetohul: Taxpayers to Cover for Rs 3.7 Million / Social Housing Unit

The construction of 8,000 social housing units has become a controversial topic, as recent developments reveal a growing concern over both the cost and the process behind these projects. Only 3,650 of these units are expected to be completed by December 2024, with the remaining units projected for delivery by June 2025.

Industry experts are increasingly questioning the decision of the National Social Living Development Ltd (NSLD) to forgo bidding processes and directly award contracts to 14 contractors.

Rajen Seetohul, the former Managing Director of the Mauritius Housing Company (MHC), has expressed his views on this significant initiative that requires an investment exceeding Rs 17 billion.

Deputy Prime Minister and Minister of Housing, Steven Obeegadoo, recently announced that the first homes constructed by the NSLD would be delivered in September, with each unit listed at a cost of Rs 3.7 million.

“What are your thoughts on this matter?” was asked to Rajen Seetohul.

“I found the Deputy Prime Minister’s comments to be quite thought-provoking,” he replied.

“He attributed the increased unit cost to rising construction material prices, claiming the figure had now risen to Rs 3.7 million.

However, I would like to remind you that there was no competitive bidding for the NSLD units, with the initial set price for a 70 m² unit pegged at Rs 2.7 million in 2023.

Additionally, the selection of the 14 contractors was done unilaterally.

I pointed out in a prior interview that this would likely create a ‘jackpot’ situation for the contractors involved.”

He also noted that former opposition leader Xavier-Luc Duval had raised a Private Notice Question regarding the project, but his inquiries were largely unaddressed due to confidentiality clauses associated with the Special Purpose Vehicle that oversees the initiative.

Seetohul highlighted a significant concern: the Minister’s announcement of a Rs 1 million increase per unit, equivalent to a 37% rise, raises questions that he believed the NSLD should clarify.

“Considering additional costs such as land purchase and essential services like electricity, water, and sewage, the total expenditure for a single social housing unit could skyrocket to nearly Rs 5 million.

This effectively undermined the very purpose of social housing,” he asserted.

“To provide context, back in 2014, the construction cost for a unit by the National Housing Development Company was approximately Rs 500,000.

Although it’s worth acknowledging that selling prices have been heavily subsidized for buyers at a fixed rate of Rs 1 million.”

As construction costs surge, the government has adjusted income eligibility criteria, raising the maximum household income needed to qualify for these homes from Rs 30,000 to Rs 40,000.

However, Seetohul pointed out that the majority of the 25,000 applicants on the waiting list have incomes below this threshold, meaning that many deserving individuals may not receive adequate housing.

Additionally, he warned that the current election season could lead to heightened speculation around housing allocations.

“Ultimately, it’s the taxpayers who will foot the bill for this project,” he emphasized.

He elaborated on the potential ramifications: if the expected final cost per unit is around Rs 5 million, and buyers are only paying Rs 1 million, the total subsidies required for the 8,000 units could exceed Rs 32 billion.

When asked for a recommendation on how to proceed, Seetohul suggested that the government should refrain from issuing these homes immediately, particularly because so many of the units may not be ready until next year.

“Moving forward with allocations at this time could just lead to more confusion and dissatisfaction, especially during an election period,” he concluded.

Source: l’Express