ISLAMABAD: Bureau­cratic hurdles are leading to unnecessary delays in supply of electricity to industrial units in the country’s first Special Eco­nomic Zone (SEZ) at Rashakai, Khyber Pakhtun­khwa.

It is a key component of the China-Pakistan Eco­nomic Corridor (CPEC).

The first phase of SEZ, which comprises 247 acres under the CPEC, was completed six months ago and plots were assigned to 18 industrial units.

Seven of these units have nearly finalised their setups and are poised to commence operations, according to official documents.

Most of the units set up in the SEZ are export-oriented, with a few focused on import substitution. The delay in electricity supply is a growing concern for these industrial units, potentially impacting their operations and overall negative signals to prospective investors.

Investors, among them overseas Pakistanis and one Chinese, are trying hard to secure electricity and gas connections, but caretaker ministers appear to be preoccupied with foreign visits and election-focused projects.

The Rashakai SEZ is the second in KP officially approved by the federal Board of Investment (BOI) under the SEZ Act of 2012. Under this law, the federal and provincial governments are bound to supply gas, electricity, and other utilities to the designated zero point of an SEZ.

The transmission lines for electricity designed to supply 160 MW have already been extended to the zero point of the SEZ. Additionally, a 132 KV grid station at Rashakai has been completed. Development work inside the SEZ has also been completed.

The China Road and Bridge Corporation (CRBC), a co-developer of the SEZ, applied to the power regulator (Nepra) for a licence six months ago. This licence would allow CRBC to supply electricity to industrial units within the SEZ.

The application was submitted through a special purpose vehicle company_ Rashakai Special Economic Zone Develop­ment and Management Company (RSEZDOC).

The licence is needed to supply and purchase power from the Peshawar Electricity Supply Com­pany (Pesco) .

The prevailing tariff for single-point supply (over 132KV) from Pesco falls under the C-3 (commercial category), which is higher than industrial category tariffs ranging from B-1 to B-4.

Red tape

Federal bureaucrats have shown reluctance in offering industrial tariffs to industries within Rashakai SEZ, despite the availability of B-4 industrial tariffs to units in Lahore’s Sundar Industrial Estate.

“We believe that the high tariff will not only discourage investment but will also affect the Chinese enterprises’ relocation to Rashakai SEZ”, the provincial caretaker Minister for Industries and Commerce, Aamer Abdullah, told Dawn on Tuesday.

Mr Abdullah said he had raised the matter with the Nepra chief. “Later I approached Care­taker Prime Minister Anwaarul Haq Kakar, who instructed the federal minister for energy and power to hold a meeting with us,” he said. This led to a meeting between the KP team and the federal ministry.

“I have been pursuing this matter since assuming my ministerial role four months ago,” he added, expressing disappointment over the lack of progress thus far.

Official documents indicate that enterprises at the Rashakai SEZ will be charged a higher rate of electricity compared to other industries in the country. This could potentially discourage investment and hinder the achievement of industrial cooperation objectives between China and Pakistan.

The success of any SEZ, including Rashakai, is not solely dependent on the provision of electricity, but rather on the availability of affordable and stable electricity.

Published in Dawn, January 10th, 2024