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KANANA KATHARANGSIPORN
The National Housing Authority (NHA) will seek an additional 2.6 billion baht from the government to help cover rising development costs for the Baan Ua-arthorn low-cost housing programme.
NHA governor Suchart Siriyothipan said the request was being made in light of the cabinet's decision this week to raise the price-adjustment formula, known as the the K-factor, by another 4% for state construction projects.
Deadlines were also extended by another 180 days for construction projects and 250 days for construction and decoration jobs.
The K-factor covers fluctuations in contractors' construction expenses between the time a contract is signed and the finished product is delivered.
For its 2008 fiscal year ending on Sept 30, the NHA estimated it could lose up to 1.7 billion baht _ 1.3 billion from Baan Ua-arthorn and 400 million baht from interest costs incurred after the last cabinet froze the programme.
''Development of houses for low-income earners definitely results in a loss,'' Mr Suchart said yesterday. The NHA lost 1.3 billion baht in the 2007 fiscal year despite earning hundreds of million baht in profit from the sale of land plots in the Rom Klao area.
The suspended Baan Ua-arthorn units totalling around 50,000 were among 301,223 units the former military-backed government froze early last year, saying the programme had to meet real demand of low-income earners.
The programme has also been beset by allegations of corruption during the term of former prime minister Thaksin Shinawatra, who initiated the project.
The frozen 50,000 units cost approximately 10 billion baht as the NHA spent money for land acquisitions and began some construction. The agency has to pay interest of up to 400 million baht per year for this amount.
Mr Suchart said the suspended units would be resumed over the next five years when the NHA would be able to develop the plots for other projects with higher prices starting from 500,000 to two million baht a unit, depending on locations, due to higher building costs.
''If we resume development now, the current cost of 260,000 baht a unit is not sufficient as construction costs have risen higher, up to 20%,'' he said.
''It will take time [to resume constructing the suspended units] as the agency has to wait for land plots to have greater potential from access to better transport.''
The previous government allowed the NHA to continue constructing 270,000 units, of which 120,000 are under way and 150,000 are completed. Of the completed units, 90,000 have been sold.
Since it established a marketing department in February to spur sales of Baan Ua-arthorn, the authority has sold 4,000 units a month at 390,000 baht for a unit on a 20-square-wah lot.
But the agency has also had to buy back about 5,000 units from customers who could not service housing loans.
The NHA has tried to solve the problem by negotiating with the Co-operatives Union so that buyers of about 5,700 units could obtain housing loans worth around 2.3 billion baht from the union.
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