"BQIP SEZ spread over an area of 930 acres in Pakistan Steel Mills (PSM) downstream industrial estate set up in 2007, is a prime example of Pakistan's systematic failure in developing an SEZ because of the government's inability to understand how an SEZ functions and the role of the Government in making it successful," the sources added.
Several ministers, advisors and other top officials of successive governments have visited the SEZ and heard the woes of investors but issues remain unresolved.
The land at BQIP was sold to investors by NIP (a 100% owned subsidiary of the Ministry of Industries & Production) at twice the rate of Port Qasim Industrial estate with the obligation under the SEZ Act of 2012 to provide all utilities at the doorstep of the industries.
Based on that obligation, five investors with foreign joint ventures and a combined investment of PKR 35 billion, namely Tecno Auto Glass Ltd, Horizon Steel (Pvt) Ltd, Kia Lucky Motors (Pak) Ltd, Hitech Alloy Wheels Ltd and Barkat Frisian bought land in BQIP and set up their industrial plants which are ready to commence operations.
"These investors have been running from pillar to post for the last one year as they cannot commission their constructed plants due to severe crisis caused due to lack of utilities at BQIP," the sources said, adding that the magnitude of these issues is huge, as the government has failed to meet its legal obligations under the SEZ Act 2012, despite repeated SOS message from investors in BQIP.
The affected companies placed an SOS in Business Recorder a couple of days ago stating that "Rs 35 billion investment in jeopardy."
One of the affectees told this scribe that despite holding many meetings over the past eight months with the federal/provincial governments and NIP, there has been no breakthrough to date on the resolution of investors' issues. At the request of the investors, Prime Minister's Advisors Abdul Razak Dawood and Dr Ishrat Hussain visited the already constructed plants at BQIP on February 2, 2019, to understand and resolve matters pertaining to utilities and land leases.
Another meeting was held on February 11, 2019 with the CEO and top management of K-Electric, chaired by Minister for Power, Omar Ayub Khan, who was accompanied by Nadeem Babar, Chairperson of the Prime Minster Task Force on Energy Reforms. The meeting was also attended by an agitated group of BQIP investors desirous of finding a solution which allows K-Electric to provide electricity to these industries directly.
According to inside sources, K-Electric has the available load to feed these investors directly but is not willing to provide them connections unless NIP or the Federal Government guarantee that they will set up a dedicated Grid in NIP at the cost of NIP.
"Unfortunately, for BQIP investors, they are caught between the cross hairs of two giants despite each investor being ready to pay the full connection charges to KE, as it is the responsibility of NIP and the Government under the SEZ Act 2012 to bear the cost of utilities to each investor's doorstep," said another investor.
As per Section 27 (i) of the SEZ Act 2012, it is the responsibility of the Federal and Provincial governments to ensure provision of electricity, gas and other utilities to the designated zero point of the SEZ, after which, as per section 27 (iii) of SEZ Act 2012, it is the responsibility of the developer to supply utilities to the doorstep of the zone enterprises.
According to the CEOs of Tecno Autoglass Ltd and Horizon Steel (Pvt) Ltd, they are facing a grave situation whereby plants are ready to start production but there are no utilities.
"If this matter is not resolved by the government on a war footing basis, we fear that we may lose our entire investment," said both CEOs who have already conveyed their fear to the government in writing.
They further maintain that it is in the federal government's best interest to provide utilities to these industries under the SEZ Act 2012 otherwise this will discourage other local and foreign investors to invest in SEZs in Pakistan which goes against PTI's mandate of encouraging economic growth through investment.
