ISLAMABAD, July 21: The Punjab government, on the instructions of the centre, is all set to acquire by force about 1,200 acres of prime agricultural land in the Sheikhupura district at a much lower than the market price for a Mercedes-Benz assembly plant by a locally-registered but hitherto unknown firm under licence from the German manufacturer, Daimler-Chrysler.

Discussions with officials in the federal and Punjab governments and company officials tell interesting stories of vested interests beyond stated objectives, unfair handling and even contradictions at all levels that reveal more mysteries associated with the project than proving it a pure automobile investment.

The project that would necessarily result in the eviction of about 250 families — who were allotted this land in Kot Pindi Das in Sheikhupura against their lost property in India as a result of their migration in 1947 — is a classic example of overstretching of the Punjab Land Acquisition Act of 1894 in the name of ‘public interest’. The law allows the government to take over private land for public use against compensation at market rates but not for private business, lawyers said.

Informed sources said the area under acquisition was beyond the needs of an automobile plant because it also involved 57 acres for a golf course, 50.5 acres for a five-star hotel, a 478-acre race track and 99 acres for expansion.

A legal document of the Sheikhupura revenue department did mention these facilities as objection raised by the landowners but did not address the issue beyond that. “There is no precedent of the government acquiring land for a luxury hotel, racing track or business venture on behalf of a private investor,” one of the landowners said.

The District Revenue Officer, Sheikhupura, notified in the Punjab gazette on February 7, 2006 that “the land is likely to be required to be taken by Coastal (Pvt) Limited … for the construction of assembly plant of commercial and military trucks and cars, it is hereby notified that land in the locality … is to be required for the above company and purpose.”

Subsequently, on June 19, the board of revenue (Punjab) approved land prices recommended by the District Price Assessment Committee for the 1,200 acres and fixed Rs125,000 for 64 acres, Rs300,000 for 430 acres, Rs350,000 for 657 acres and Rs425,000 for 47 acres. On June 24, the Deputy District Officer, Land Acquisition Collector, was directed to proceed further.

Before the project could take off, the residents of Kot Pindi Das – who are on the verge of being forced to hand over the land to Coastal Private Limited for Rs484 million at the rate of Rs400,000 per acre — organised themselves under a newly-formed ‘Anjuman Kissan Mutasrin-e-Mercedes-Benz’ to protest in Lahore and Islamabad, says Rana Ehsanul Haq who is one of over 1,500 affected persons.

Kot Pindi Das is an agricultural mauza along the motorway in Skeikhupura, just 18km from Lahore Courts. About two kilometres from this area in Kalar, Chamkey and Dargahi Gil, the government of Punjab acquired a 305-acre piece of land for the University of Engineering and Technology, Lahore, at a much higher price of Rs800,000 to 1.2 million per acre under the same act and did not raise any objection considering its clear nature of ‘public interest’ for providing technical education. This was only nine months ago and the prices have not suffered a dramatic fall since then.

In brief, the government purchases 305 acres for Rs317.3 million for a public sector university at about an average rate of Rs1 million per acre and now compare it with 1,200 acres for just Rs484 million at an average rate of Rs400,000 per acre for a business concern in the same area.

The owners of the land in Kot Pindi Das say that the government cannot acquire land on behalf of a private venture and that, too, at less than half the price. Mr Haq told Dawn that the market rate of the land ranged between Rs3-4 million per acre because it is right by the motorway and would go up further when a proposed inter-change is built at a later stage. Documents suggest the prime minister’s secretariat has already directed the ministry of communications to “allow and provide exit from the motorway (M-2) for Daimler Chrysler by the National Highway Authority”.

“This is highhandedness. The government is not even providing alternative land to us,” says Mr Haq, adding that “we are ready to be killed instead of being evicted from where we have been living since Independence (in 1947).”

“Why is the company not purchasing the land itself as a private transaction as the Honda Company did recently?” asks Mr Haq. The land being acquired by the government is much more than the requirement of an automobile plant. Honda Company purchased just six acres of land in Sheikhupura for its plant and the government had no role in that. The total cost of the piece of land purchased by Honda was Rs12 million at a rate of about Rs2 million per acre and that too a couple of years ago, he said.

Safdar Javed Syed, senior member revenue, Punjab, confirmed that the district price assessment committee had approved a price that has been challenged by some of the owners. The committee is led by the District Officer Revenue and detailed comments from the committee have been sought. He would not comment when asked if 1,200 acres were really required for an automobile plant.

A senior revenue official, however, said the requirement of 1,200 acres was sought by the Chief Minister’s Secretariat on the request of the federal government and the relevant provincial authorities were required to determine the price and complete the acquisition process. The physical acquisition would start upon the receipt of Rs484 million from Coastal-Mercedes joint venture, he said.

Nobody in the board of investment (BOI) – a federal agency responsible for investment promotion – is ready to discuss or defend the project. Senior officials contacted by Dawn said the whole file on Daimler-Chrysler project was not available with the BOI. A senior officer said: “The file is in the personal custody of Minister of State Umar Ghumman,” who has been in the United States for more than a month where he has family business interests. Dawn was informed that Mr Ghumman would be back on July 15 but he is yet to return.

On July 19, this correspondent once again contacted the BOI secretary, Jehangir Bashar, and asked about the whole size of the investment, its components including the hotel, golf course, etc and the land requirement. He promised to provide the relevant information and said one of his officers would get back with the information. An official did subsequently establish contact but only with the information that the minister of state was expected to return in three to four days and a meeting would be arranged then. He expressed his inability to be of greater help.

On June 15, Mr Ghumman had announced that Daimler-Chrysler and Coastal Group would invest $5.85 billion in Pakistan by starting production of Mercedes-Benz trucks, both commercial and military, buses and Mercedes cars of various types to create a vendor industry.

The group would set up its plant on 1,200 acres near Sheikhupura provided by the government. The investment would create 5,000 jobs directly and indirectly, said Mr Ghumman at a press conference.

Hafiz Mohammad Taqi Rehman Lakhvi, a local representative of Coastal Limited, when contacted, said the company had been stopped from issuing any statement in the press about the Mercedes-Benz project. He, however, said President Musharraf was personally pushing the project and had informed the company officials during a meeting on May 10, 2006 that he would himself inaugurate the plant on completion perhaps in April-May next year.

However, a company official, who requested anonymity, said the total investment to be made over a period of five years would amount to $1 billion and “not $5.8 billion as announced by Minister of State Umar Ghumman” and this would include the Mercedes-Benz plant for the production of trucks, buses and cars in addition to the whole vendor industry. The units would be imported in CKD form under the prevalent automobile import policy and assembled locally without application of a deletion programme.

He said 100 per cent investment, and all this is foreign investment, would be made by the Coastal Private Limited and Daimler-Chrysler had no direct investment. The German giant, he said, would provide engines and technical know-how of the plant and the costly Mercedes trucks, buses and E and C class cars would be marketed by Coastal under licence from the German firm.

He confirmed that Coastal and Mercedez firms have not yet signed any final agreement but have exchanged feasibility studies and initial MOU. He said the first truck would roll out from the plant latest by April next year and Pakistan army’s National Logistic Cell, Frontier Works Organisation and the army itself would be the major clients. “NLC alone has committed to purchase about 300-400 trucks every year for the next five to six years,” he said, adding the plant would produce 1,000 trucks on a yearly basis with a single shift that could be increased to 2,000 or more with double shifts.

He said the company would achieve 50 per cent localisation in two years and was expected to start production of cars after three years. He said a delegation of Daimler-Chrysler was expected to visit Pakistan later this month. He said Coastal Private was registered locally with majority shareholding of Sheikh Yousaf Mohammed Najibi of the UAE, whose Coastal Trading & Contracting Company LLC, Dubai, is a big company of the Gulf.

He claimed that in addition to a number of real estate, stock market and other investments, Sheikh Najibi’s investments in multi-billion-dollar Dubai Sports City (DSC) were higher than Abdul Rahman Bukhatir’s. This, however, could not be verified through an examination of the DSC website. About the debt-equity ratio, he said the whole $1 billion would be foreign direct investment with no local financing and hence it did not matter whether the amount was raised through foreign banks in the form of loan or equity.

The source confirmed that Coastal had also heard about the golf course, housing and hotel facilities, but claimed that his company could not do so under any agreement with the provincial government or the German auto-firm. He said the process for acquisition of about 1,050 acres was about to begin but agreed that his company would not need more than 600 acres.

Official documents of the District Officer Revenue, Sheikhupura, claimed that acquisition of land was taking place under section 4 of the land acquisition act of 1894 that made wishes of the public irrelevant in terms of “compulsory land acquisition.”

Raja Shafqat Abbasi, a senior lawyer and member of the Punjab Assembly, said the government could not acquire land for private commercial projects or private housing societies under the land acquisition act. However, the Punjab government had adopted it as policy to forcibly take over 20 per cent land for housing societies provided such societies already possessed 80 per cent of land.