KARACHI: Investors at the Bin Qasim Industrial Park (BQIP) are in a quandary as the K-Electric (KE) has failed to energise their plants after a delay of more than 40 days.
Earlier on Feb 11, four investors met with the KE management which agreed to provide utilities to the projects being set up by these investors at the BQIP and a memorandum of understanding (MoU) was signed between National Industrial Parks Development and Management Company (NIP) and the KE in the presence of Minister for Industries and Production Abdul Razzak Dawood.
During the event, it was agreed that NIP would set up a federally-funded grid station at the BQIP for the provision of electricity to these projects.
One of the investors remarked that even though it was federal government’s responsibility to arrange utilities at their doorstep, “all of us have paid the KE close to Rs200 million to install direct feeder cables at our plants and provide utilities latest by March 31.”
However, he said that “more than a month has passed since that deadline and even though the KE has laid the feeder cables to our plants from the Pipri grid, they are delaying energising our plants.”
Investors are in a fix as the NIP, the KE and the federal government are at loggerheads with each other over arranging funds for the grid station at the expense of these four investors even though they have paid the KE funds for their direct connections.
Rejecting the allegations, the KE spokesperson said that, “under the MoU, the KE was to receive Rs500m to initiate construction of grid at the designated “zero point” at the BQIP along with a portion of costs that four business operating in the zone had volunteered to pay. Energisation of urgently-needed 11KV feeders of the four zone enterprises is subject to both these payments (clearly mentioned in the agreement). Whereas, the zones have held up their end, a formal approval and confirmation of release of funds from NIP/Government was expected to be shared latest by March 21.”
He added that, “NIP further indicated in February that the responsibility to fund the grid lies with federal government and that a formal commitment in form of Economic Coordination Committee decision for release of funds will be shared with KE by March 21. the KE is yet to receive this decision.”
BQIP, one of the country’s largest Special Economic Zones (SEZs) being developed by the federal government in Karachi, had attracted an investment of over Rs35 billion from five investors with foreign joint ventures, namely Tecno Auto Glass Ltd, Horizon Steel Ltd, Kia Lucky Motors Pakistan Ltd, Hi Tech Alloy Wheels Ltd and Barkat Frisian.
Land was sold to these investors by NIP — 100pc owned subsidiary of the Ministry of Industries and Production — at twice the rate of the Port Qasim Industrial Estate with the obligation under the SEZ Act of 2012 to provide all utilities at the doorstep.
However, investors have been running pillar to post to commission their constructed plants due to lack of utilities for the last two years.
According to representatives of Tecno Auto Glass Ltd and Horizon Steel (Pvt) Ltd, “we seriously regret making an investment in an SEZ as we are losing billions because the government couldn’t live up to its commitment and neither the federal government, NIP [nor the] KE seem to care. We wonder why new foreign investors would come to a country where existing investors are treated with utter indifference.”
“Our plants are ready to start production but we don’t have any utilities. If this matter is not resolved by the government on a war-footing, we may lose our complete investment and have no option but to take the government to court for not keeping its obligation as per the SEZ Act.” they warned.
Expensive power at KCIP
Mehran Commercial Enterprise Director Mashood Ali Khan, one of the investors at Korangi Creek Industrial Park (KCIP), said that currently 13 companies have begun operations and more than 45 companies are under construction at KCIP which will be completed within the next few months. These 13 units have invested around Rs1bn.
He said the NIP has allotted a local company for providing power to 13 units whose power costs double that of the KE. As a result, our cost of production has increased manifold, making exports uncompetitive.
He said majority of the companies are getting export orders but due to lack of electricity these companies fail to comply with the export demand. Due to lack of power, many local investors have been delaying their joint ventures with foreign counterparts.
Mashood said investors are trying to get basic necessities like energy, tax exemptions, etc. He said he had sent several requests to the Board of Investment and Industries Minster to resolve the issues of the KCIP but so far nothing has been done practically.
Published in Dawn, May 11th, 2019