PESHAWAR, Dec 26: The Khyber Pakhtunkhwa government’s long term credit facility for promoting industrial activities in the province to create jobs is likely to remain short of yielding the desired results, according to industrialists.

The government’s special initiative for which it has allocated Rs1 billion from the provincial kitty has made several from among the local industrialists to describe it as a looming failure because of its lack of appeal for them.

“The scheme is doomed to fail because of the tough criteria and higher rate of interest,” said a former vice president of Khyber Pakhtunkhwa Chamber of Commerce and Industry.

He said that lending agency engaged to disburse the loans had set tough terms and conditions as a result of which even the existing industrialists would fail to qualify for the credit facility.

In its meeting on July 13, 2012, the Khyber Pakhtunkhwa cabinet sanctioned a credit line of Rs1 billion for promoting industrial activities in the province with an explicit objective to create jobs by providing liquidity to the new and existing manufacturers.

However, it took the provincial bureaucracy about five months to launch the scheme in December this year when industries department and the provincial public sector Bank of Khyber signed a Memorandum of Understanding (MoU).

Peshawar-based steel manufacturer Nauman Wazir termed the provincial government’s initiative ‘vital’ in the given situation when private banks were reluctant to provide long term financing to Khyber Pakhtunkhwa-based industrialists.

“So far, the scheme has not yet taken off and it is only a mere announcement,” he said, adding that neither the existing industrialists nor the new entrepreneurs would opt to borrow money if the provincial scheme entailed an interest rate of five per cent over and above Karachi Inter Bank Offer Rate (Kibor).

The provincial government’s scheme entails a total interest rate of seven per cent and would be payable in eight years on four-moth installment basis, as per the provincial cabinet’s July 2012 decision.

“It seems they (BoK and the industries department) do not want to issue loans because neither the scheme’s terms nor conditions could be met even by the existing manufacturers nor anybody could afford to return the borrowed money at a seven per cent interest rate,” said a KPCCI member.

On his part, Mr Wazir, too, said that if the government wanted to achieve the desired results of recording higher industrial growth then the lending scheme should entail marginal interest rate.

“Commercial banks prefer to extend working capital to Khyber Pakhtunkhwa industrialists because they don’t have much liquidity to offer owing to massive borrowing by the federal government,” he said.

Under the given circumstance, he continued, none of the commercial banks was ready to finance new industrial projects in Khyber Pakhtunkhwa and the provincial government’s long term lending scheme could play an important role in encouraging new investment by keeping the interest rate at a low rate.

However, the scheme, according to the former KPCCI office-bearer, was bound to fail because the applicants are required to provide collateral.

“It simply means they are not interested to lend money,” said the industrialist.

Another KPCCI representative said the scheme was not likely to click because Khyber Pakhtunkhwa did not support industrial activities at all.

“Who is going to invest money in Khyber Pakhtunkhwa when its industrial estates lack proper facilities, its roads are in dilapidated conditions and production activities suffer due to massive power outages,” said the KPCCI representative.

Khyber Pakhtunkhwa, he added, did not involve a facilitating industrial environ as a result of which “you can count the number of existing industrial units on your finger tips.”

Meanwhile, the scheme, according to sources, is experiencing hiccups because the government has not yet released the funds to the bank.

“We have not yet been provided the funds,” said an official of BoK, requesting anonymity, adding that the matter was lying pending with the provincial finance department.

A senior official of the finance department, when contacted, said that if the bank was saying that it had not received the funds then they would not have received it.

The delay in the disbursement of funds, said industrialists, would serve a further blow to the implementation of the scheme.

“This government is about to leave within next few weeks and if it does not release the funds before its departure then the future of the scheme would be uncertain,” said a manufacturer.