Social Housing Construction Rs 515.2 Million Wasted in Terminated Contracts
Between Rs 18.9 billion disbursed to New Social Living Development Ltd for social housing construction and Rs 515.2 million squandered on terminated contracts, the latest audit report highlights unnecessary expenditures and the administrative complexity of state-owned companies established to manage this project.
Context
From 2020-2021 to 2024-2025, a total of Rs 35 billion has been spent under the Projects Development Fund (previously known as the COVID-19 Projects Development Fund) for various infrastructure projects. As of June 30, 2025, Rs 18.9 billion had been transferred to New Social Living Development Ltd (NSLD) as government funding to cover expenses related to social housing construction. Additionally, for the fiscal year 2024-2025, Rs 6 billion was disbursed through the Building Society Fund Ltd (BSFL) for subsequent transfer to NSLD to pay contractors.
Audit Recommendation
"The Ministry of Finance should evaluate whether the current multi-entity structure (MHHL, BSFL, and NSLD) still serves its initial purpose. Appropriate decisions should be made accordingly."
Three Observations from the Report
1. Termination of Project Management Consultants Contracts
Following the government's decision to build 12,000 homes (Budget 2020-21), NSLD hired eight Project Management Consultants for a total contract value of Rs 919.4 million between November 2021 and March 2022. In September 2022, after the first tender based on the consultants' plans, the average cost per home proposed by bidders ranged from Rs 3.93 million to Rs 6.8 million, deemed too high. A second procedure in November 2022, with a new set of specifications, did not improve the housing cost. In February/March 2023, to deliver a maximum number of social homes on time and cost-effectively, the government approved the construction of 8,000 homes under Phase 1, using a "design-and-build" concept according to the specifications of the National Housing Development Company Ltd (NHDC), with an estimated cost of Rs 2.74 million per unit. Consequently, the contracts with Project Management Consultants were terminated: one in December 2022 and the remaining seven in April 2023. Of the Rs 496.8 million paid to these consultants, Rs 296.96 million were used for legitimate purposes, including topographic studies, geotechnical investigations, feasibility studies, and preliminary authorizations.
2. Termination of a Fund Administrator’s Contract
On September 23, 2022, Mauritius Housing Holdings Ltd (MHHL) was established as a private company wholly owned by the government. On September 29, 2022, MHHL created the Building Society Fund Ltd, whose main activity is to raise Rs 7.2 billion from private investors to finance a third of the cost of constructing homes. In August 2023, a memorandum of understanding was signed between NSLD and BSFL to co-finance the construction of 8,000 homes. On April 15, 2024, BSFL appointed a fund administrator to manage this operation. However, as the fundraising process proved too lengthy, the contract was terminated in December 2024. Between September and October 2024, Rs 18.4 million was paid to this administrator by BSFL, constituting unnecessary expenditure.
3. Reevaluation of Created Companies
The government injected funds into Mauritius Housing Holdings Ltd:
• 2023-2024: Rs 11 million transferred to MHHL (Rs 10 million for acquiring shares in Building Society Fund Ltd, Rs 1 million for MHHL's initial capital),
• July 2024: Rs 6 billion injected as capital into MHHL,
• June 2025: Rs 20 million transferred to cover operational costs for MHHL and BSFL.
According to the audit report, the Building Society Fund Ltd did not achieve its goal of financing from private investors and had to rely on government contributions to pay contractors.
The establishment of MHHL to transfer funds to BSFL, then to NSLD, generated significant administrative costs (board member salaries, legal/professional fees), which could have been avoided if the funds had been directly disbursed to NSLD.