ISLAMABAD, Feb 9: The federal government has allowed the Pakistan Security Printing Corporation (PSPC) to immediately overhaul its entire old and "doubtful" machinery at a cost of Rs5.2 billion.

Official sources told Dawn here on Tuesday that the government's permission was granted for Balancing, Modernization and Replacement (BMR) of the banknote printing and finishing machinery following reports of its doubtful operations.

The government was informed that the repair and maintenance cost has gone up due to frequent breakdowns. The spares of these machines were not available off the shelf and needed to be specially manufactured at an increased cost. The spares of the machines are at least 20 to 25 years old.

"Thus the smooth operation of these machines remains doubtful and stoppage can occur at any time and will create a very serious problem in the supply of currency/banknotes to the State Bank of Pakistan. It is also difficult to maintain the quality of notes produced on these machines and to ensure good quality notes, the latest technology machines have become imperative," write PSPC authorities to the federal government, a copy of which has also been made available to this correspondent.

The new machines would meet the State Bank's demand of banknotes for the next 10 years. The total cost involved for the proposed BMR is Rs5.2 billion, including a Foreign Exchange Component (FEC) of Rs4.9 billion. The BMR programme is to be financed partly by the Corporation's own resources and partly through term borrowings. The final workings indicated a payback period of 7.25 years making this project viable and feasible.

The Board of Directors of the Corporation has approved the BMR of the organization which is producing banknotes, prize bonds, stamps, passports, cheques, travellers cheques, national identity cards, motor vehicles registration booklets, university degrees, etc. The major customers of the Corporation like the State Bank of Pakistan, all schedule and commercial banks and offices of other government agencies are located in Karachi.

The Corporation maintained that the BMR of the banknote factory is required to consistently meet the requirements of banknotes which otherwise has to be printed from aboard involving foreign exchange and "security risk".

The demand for banknotes, particularly higher value notes, is increasing every year. The proposed BMR will enable the Corporation to meet the increased demand for banknotes.

The major equipment required for the BMR comprises of the latest model banknote printing and numbering machines.