MPL flat project completed at a loss to the company: Audit report

An audit report has revealed that the MPL Hiyaa Flat project in Hulhumalé Phase 2 was executed in a manner that caused loss to the company.

The audit report released by the Auditor General's Office on the 13th of this month states that before awarding the "MPL Hiyaa" project to the contractor in 2018, no financial feasibility study was conducted to determine the project costs and investment recovery period. The report also mentions that the necessary funds were not secured before the project began.

The report states that bid security was not obtained during the bidding phase as per the company's general policies and regulations applicable to state companies. It also notes that instead of the required 10 percent of the total project cost as performance security, only 2.2 percent was obtained.

The "MPL Hiyaa" project, which was the first apartment complex to be built by a state company, was awarded to W&A Overseas Private Limited from Singapore.

Key findings from the audit:

- The cost of painting some floors in the towers was not included in the BOQ. This work was done at a higher price than usual.

- The project, which was to be completed in two years, took five years and three months to finish.

- Consultancy services for the project were arranged six months after the actual work had begun.

- The project was started without securing the necessary funding.

"MPL has been funding this project using cash flow from other purposes, which could potentially lead to financial challenges for the company," the report states.

According to the report, due to using the company's cash flow for this project, the company did not pay MVR 291 million out of the MVR 346 million they had declared to pay as dividends to the government from 2018 to 2022.

"When considering the present value of the income MPL will receive once the flat payments are completed, it is noted that this value is less than the current value of the total investment," the audit report states.

The report also mentions that the selling price of MPL's flats to employees is not high compared to the prices of flats built under housing projects of some other government companies.

MPL released 534 flats to its employees, including 204 one-bedroom apartments and 330 three-bedroom apartments. People started living there in the middle of last year, and rent collection began three months ago.

MPL took out loans totaling MVR 110 million for the project. While the interest on the loans amounts to MVR 10.7 million, some changes to the flats resulted in an additional cost of MVR 56 million.