Companies Suffering Heavy Losses at Bin Qasim Industrial Park

Companies are facing heavy losses in the Bin Qasim Industrial Park (BQIP) Special Economic Zone (SEZ), due to unavailability of utilities.

Five companies, including three related to the auto sector, have made a combined investment of Rs 35 billion at BQIP, which comes under the National Industrial Park (NIP). An official from an auto company on the condition of anonymity said:

“The companies are incurring losses of millions of rupees due to unavailability of utilities. Things have been aggravated by the exchange rate losses as the rupee has devalued by 18% in the past nine months. The biggest loss is due to the fact that equipment has arrived but there is no power to install and start commercial production. Delay in plant start-up is a huge cause of stress for the investors.

Furthermore, banks’ financial charges on loans are also taking their toll. However, the worst loss is that Karachi has become unviable (for business) as compared to Faisalabad and Lahore due to basic utilities and infrastructure.”

The source reiterated that companies were now moving to Punjab where they were being more welcomed. According him, the BQIP has delayed provision of utilities by two years and as things stand now, there is nothing in sight for the next one year.

Related: Auto Assemblers Shifting Investments from Sindh to Punjab

Another company’s top official said although they were not in a haste to receive utilities as their installation was in process but they were now forced to do the work, which they were not supposed to do.

“We are now directly working with K-Electric for the provision of electricity. All the utilities were supposed to be provided by BQIP but unfortunately that’s not the case.”

Kia Lucky Motors, Techno Auto Glass, Hitech Auto Parts, Horizon Steel and Barkat Frisian have either completed work at their plants or would soon be doing so. According to the companies, the projects will create direct job opportunities for around 3,500 skilled workers, technicians, engineers and management professionals in Karachi.

BQIP was set up in 2007 to develop a world class industrial park and commitments were made to provide one-window operations and complete infrastructure under the Special Economic Zones Act.

Based on these commitments, investors agreed to purchase BQIP’s Pakistan Steel Mill (PSM) land at almost double the land price in Port Qasim Eastern Zone, due to NIP’s commitments to deliver state-of-the-art industrial park with provision of free utilities, namely electricity, gas, water, sewerage, effluent plant. Moreover, infrastructure, namely roads, boundary walls, security and allied facilities were also promised. The source lamented:

“Unfortunately, none of these facilities have been provided to date. “These issues have choked the implementation of above projects, resulting in time delays of almost two years and caused massive cost overruns, including impact of currency devaluation.

Much of the investments planned in NIP, Karachi, have shifted to FIEDMEC, Faisalabad like Renault Motors and General Tires and it will continue to keep shifting unless the above issues are addressed immediately”.

However, according to a source in NIP, Renault Motors and General Tires have moved their facilities to Faisalabad because of very high price differential at BQIP, which has been ‘unilaterally’ jacked up by PSM. BQIP has been established at PSM land.

Related: Sindh Government Approves SEZ Status for 9 New Business Enterprises

The aggrieved company official went on to say:

“Without immediate intervention, the pace of industrialization will be seriously hampered, heavy foreign and local investments will be jeopardized, tax revenues will be lost and the government’s international image will be tarnished.”

Full Story: Tribune

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