ISLAMABAD, June 29: A local Nexus Automotive and Saudi Balubaid company are making an initial investment of $15 million to start assembling small Chevrolet cars next year in Pakistan under a franchise agreement with the General Motors of the US.

The chairman of Nexus Automotive and Executive vice-president of General Motors Mohammad A Razaq and chairman of Balubaid company Sheikh Omar A. Balubaid told a news conference here on Tuesday that they would use the assembling plant of Gandahara Nissan against a fee to roll out 800-cc and 1000-cc Chevrolet cars in the later part of next year.

The delegation had separate meetings with President General Pervez Musharraf and prime minister in-waiting Shaukat Aziz here on Tuesday and informed them that they planned to set up a full- fledged manufacturing plant in Karachi in the second phase of investment.

"The president asked as to why the company was not starting with its own manufacturing plant for which he also offered the required land," Mr Razaq quoted President Musharraf as saying.

He said the president was told that the company wanted to make a humble start and develop the required infrastructure and supply line of parts in two year's time before it formally established its $300 million manufacturing plant.

Mr Razaq said he had set up General Motors (GM) manufacturing plant in India a few years back and had worked with Shaukat Aziz in many countries as general manager of the General Motors and had very friendly relations with the prime minister in-waiting.

He said his Nexus Automotive and Saudi Balubaid would have 50 per cent shareholding in the project for which General Motors would provide technology, technical support and full supervision to maintain its quality and standards for which it is known world wide.

In the next couple of years, they planned to provide all products of General Motors. He said the Gandahara plant was originally set up by General Motors and had later sold out to Gandahara Nissan which was currently lying idle.

Sheikh Omar A. Balubaid said it was his first visit and investment in Pakistan and he was encouraged by the support offered by President Musharraf and Mr Shaukat Aziz. Responding to a question, Mr Razzaq said he had imported 900 cars of 800-cc last year and were a success but said its price was on the higher side because the batch was imported at 75 per cent import duty coupled with a number of other taxes.

He said the locally assembled cars would be of higher quality than currently available in the market and the prices would be competitive.

He said the assembling plant would have the capacity of producing 10,000 cars per annum. He said Pakistan was the only country where assemblers and manufacturers were earning phenomenal profits and still the customers had to pay high premiums.