BoI board’s decision: SEZs’ investors will bear cost of utilities

ISLAMABAD: The federal government has decided that the cost of utility facilities will be borne by investors of Special Economic Zones (SEZs) till zero points to be reflected in development agreements, well-informed sources told Business Recorder.

The decision was taken at a recent meeting of the Board of Administrators of Board of Investment (BoI) presided over by Minister for Investment, Ch Salik Hussain.

Sharing details on evaluation of six zones’ application for award of status of SEZs in Khyber Pakhtunkhwa, Sindh and Punjab, the sources said, the BoI received the application from SEZ Authority Punjab for the establishment of a multi-industry SEZ, namely “Challenge Special Economic Zone” at Lahore-Kasur Road, Punjab, on July 7, 2022. Resultantly, the application was examined by the SEZ Secretariat as per the provisions of the SEZ Act 2012, rules and regulations framed thereunder. Final application for award of SEZ status was submitted by SEZ Punjab on August 10, 2022.

The proposed SEZ of 99.45 acres is to be developed by Challenge Fashion (Private) Limited (CFPL) at a project cost of Rs 3.10 billion for textile and allied industry. CFPL is a subsidiary of Shanghai Yuanyi Industry Co Limited and is 100 per cent Chinese owned enterprise duly incorporated in Pakistan. The SEZ proposal is to house CFPL’s textile unit having Foreign Direct Investment (FDI) of $ 158.9 million on 51.9 percent of land. It is undertaken by the CFPL that the cost of provision of inside and outside infrastructure of proposed SEZ, including but not limited to provision of utilities is to be borne by it. It was further apprised that CFPL will complete the project with 24 months from the date of notification

Secretary Board of Investment apprised that as part of the evaluation exercise of the zone the application was shared with the Ministry of Interior, which raised certain concerns on ownership of the SEZ by a 100 per cent foreign owned entity. Secretary BoI gave full disclosure of the case and the members deliberated on it while noting that foreign investment must be encouraged and the concerns highlighted by the Ministry may be addressed in the development agreement.

Secretary Power Division showed concerns regarding provision of utilities and said that it needs to be clarified who is to bear the cost of provision of utilities till zero point of the SEZs that are to be granted status today. Petroleum Division also expressed the same concerns. Secretary BoI apprised that the developers of the zones will bear the cost of provision of utilities till zero point and it will be reflected in their respective development agreement as well, as per SEZ law.

After detailed deliberations, the BoA unanimously granted the status of SEZ under the provisions of the SEZ Act 2012 and allowed its Secretariat to issue the necessary notification for the SEZ and its SEZ Committee to operationalise it and ensure necessary clauses are made part of the Development Agreement to ensure all conditions are met as per commitments.

M/s CFPL will furnish an unconditional undertaking that it shall not seek any funding from the Federal Government for provision of utilities till zero point and it will be reflected in the respective Development Agreement. PBIT/SEZA Punjab is to ensure local job creation from the project whereas SEZ Secretariat is to put in place a robust enforcement mechanism to ensure commitments are met as per timelines.

Indus Valley Industrial Junction SEZ, Rajanpur, Punjab: The proposed 124 acres SEZ is situated on the Tri-Border area of three provinces, ie, Punjab, Sindh and Balochistan and is aimed at stimulating economic activity in the relatively underdeveloped area of Rajanpur and adjoining districts of Sindh and Balochistan.

The BoI considered the application of Indus Valley Industrial Special Economic Zone and with a majority vote granted the status of SEZ under the provision of the SEZ Act 2012 and allowed its Secretariat to issue the necessary notification for the SEZ and its SEZ Committee to operationalise it and ensure necessary clauses are made part of its approval and the Development Agreement to ensure all conditions are met as per commitments.

Fatima Cement Limited Sole Enterprise Special Economic Zone Dera Ismail Khan: The BoI received application of proposed SEZ on 333 acres received from Khyber Pakhtunkhwa SEZ Authority (KPSEZA) on July 5, 2022. Resultantly, the application was examined by the SEZ Secretariat as per the provisions of the SEZ Act 2012, rules and regulations framed thereunder. The final application has been submitted by the KPSEZA on August 11, 2022. The application meets the investment threshold requirements stipulated for designated area under the SESEZ Regulations 2022 i.e. $ 25 million.

The BoI considered the zone application and unanimously granted the status of SEZ under the provisions of Act. The BoI also approved Premier Cement Limited SESEZ, Dera Ismail Khan, Khyber Pakhtunkhwa on 600 acres of land with an investment of $ 25 million.

FFB (Private) Limited SESEZA, Thatta, Sindh on 53 acres of land with an investment of $ 25 million and Roshan Sun Tao Paper Mills (Private) Limited, SESEZ, Sheikhupura, Punjab on 56.9 acres of land with an investment of $ 75 million in five years.

Copyright Business Recorder, 2022