The Ministry of Textile Industry is to consult Ministry of Finance (MoF) to finalise terms and conditions for raising additional rupees one billion funds for cash-strapped Textile City in Karachi, official sources told Business Recorder on Saturday.
The Economic Co-ordination Committee (ECC) of the Cabinet, in its meeting on May 19, approved issuance of government guarantee for the amount requested by the Textile Ministry. The sources said the ECC was informed that Pakistan Textile City, located in the eastern zone of the Port Qasim Authority (PQA), Karachi, spread over 1250 acres of land, was a joint venture of the government of Pakistan, public sector and prime financial institutions.
Initially, its total paid-up capital was Rs 1.1 billion, of which the government contribution was Rs 500 million, while the government of Sindh and Port Qasim Authority contributed Rs 100 million each. The share of Pakistan Industrial Development Corporation (PIDC), Export Processing Zones Authority (EPZA), National Bank of Pakistan (NBP), Pak Oman Investment Company (POIC), Pak Kuwait Investment Company (PKIC), Saudi Pak Industrial and Agricultural Company, PICIC (now NIB Bank) and Pak Libya Holding Company contributed Rs 50 million each.
It was further revealed that Textile City Company exhausted initial paid-up capital on acquisition of land and its subsequent levelling and grading. According to the Textile Ministry, the project is now approaching maturity and is at the marketing stage. The land has been levelled and sale of plots can be initiated after carrying out plotting and construction of road networks.
Certain critical developmental works, such as approach roads, water reservoirs, water supply networks and administration blocks are to be initiated so that the process of marketing can commence. The Ministry was of the view that Textile City needs to raise an additional amount of rupees one billion from banks, which would make up the shortfall of resources due to non-subscription of increased capital.
The sources said the ECC considered the summary on "issuance of government guarantee of rupees one billion for Pakistan Textile City, Karachi," submitted by Ministry of Textile Industry, and approved issuance of government guarantee for a period of two years. However, terms and conditions of the loan will be decided with the consent of Finance Division.