ISLAMABAD : The Economic Coordination Committee (ECC) of the Cabinet which is scheduled to meet on Wednesday(today) is to direct Pakistan Industrial Development Company (PIDC) for the formulation of a Master Plan for the development of entire 6409 acres of PSM land, including through private developers, , Newzshewz has learnt reliably.
Pakistan Steel Mills (PSM) owns 19013 acres land at Bin Qasim in Malir District, Karachi. Out of this, 6409 acres land is available for setting up an industrial estate. However, Government of Sindh is of the view that setting up of such an industrial estate will require change in land use from ‘steel mills’ to ‘industrial use’. Further, about 1675 acres of this land has still not been mutated in the name of PSM by Government of Sindh despite full payment
Earlier, on the request of Ministry of Industries and Production, Sindh Government conveyed their agreement to the use of land for setting up an Export Processing Zone (EPZ) in terms of section 10(f) of the Colonization and Disposal of Government Lands Act, 1912.
During 9th meeting of the Apex Committee of the SIFC held on February 02, 2024, Chief Secretary, Sindh was directed to seek requisite approval from Provincial Cabinet for the change of use of PSM land. During 10th Apex Committee meeting of the SIFC held on May 25, 2024, the Government of Sindh was again directed to allow change of use and transfer the unmutated 1675 acres in PSM’s favour. However, through their letter of May 31, 2024 Government of Sindh conveyed that it has modified its earlier decision of February 1, 2024 in the following terms: (i) land earmarked for Pakistan Steel Mills Plant (nearly 700 acres) should be kept intact for the purpose of revitalization of the steel mills plant or setting up new steel mills, any additional requirement of land for the purpose shall be worked out mutually; (ii) 4840 acres may be utilized for setting up of SEZ/EPZ or any other industrial purpose;(iii) 3200 acres out of 4840 acres, proposed for industrial use, which is in the name of PSM, may be resumed by the Government of Sindh (GoS), invoking the provisions of section 24(a) and be reallocated to a special Purpose Vehicle (SPV) to be jointly owned by GoS and Government of Pakistan (GoP) on agreed upon terms, changing its purpose to “industrial”; (iv) the remaining 1675-14 acres, which is still in the name of GoS may also be transferred to the SPV on the same terms as given ; and (v) the proposed respective shares of GoP and GoS shall be mutually agreed upon on the basis of rate differential for allotment of land for setting up of steel mill (PSMC) and for leasing out land for industrial purpose (BQA).
The Ministry of Industries and Production requested Government of Sindh repeatedly to reconsider this decision. A committee constituted by MoI&P in light of decisions arrived at during 6th meeting of the Apex Committee also met on this matter on several occasions however the mater remained unresolved. After a meeting between Minister for Industries and Chief Minister Sindh on August 30, 2024, the Government of Sindh, in a letter of September 24, 2024 communicated its modified consent as per the following details: ( i) purpose of 3200 acres of land, proposed for industrial use, which is already in the name of PSM, may be changed to “industrial use”; ;(ii) the land measuring 1,675 acres, allotted to PSM (1974-75) for Steel Project, which is in the possession of the PSM but its title has not been transferred to (iii). PSM, may be transferred in the name of PSM, for the specific purpose of “Industrial use”; (iv) the Federal Government, PSML or any other entity on its behalf will offer the land for setting up industry free of charge/without charging any value of land. In case any value, rent or lease for land is charged, that will be in consultation with the Sindh Govt. on such terms/arrangement as mutually agreed upon between the Federal & Provincial Government; and (v). land (nearly 700 acres) should be kept intact for the purpose of revitalization of the Steel Mills Plant or setting-up a new Steel Mill, any additional requirement of land for the purpose shall be worked out mutually.
The MoI&P has already taken up the matter for affecting mutation of land and change of use from “steel mill” to “industrial use” in the land record with the Government of Sindh and is rigorously pursuing it with the relevant authorities.
The Special Investment Facilitation Council (SIFC) in its 11th Apex Committee meeting held on January 02, 2025 has inter alia directed that: ” use of PSM land (4875 acres) for SEZ/industrial purpose shall be dealt with separately in accordance with Government of Sindh’s letter of September 24, 2024″
The MoI&P has agreed with the proposal of Sindh Government , adding that around 700 acres land has already been earmarked and MoI&P is making efforts for revitalization of steel mills plant or setting up a new steel mill.
The MoI&P is of the view that view that since PSM is full owner of land this condition could be contested on legal grounds. Alternately, a second round of consultation could also be initiated. However, it is important to resolve this matter at the earliest to avoid opportunity cost of inaction and make best use of the time transient opportunity for attraction of investment in manufacturing sector in Pakistan in the larger economic interest. Additionally, this proposal is in line with the directions of 11th Apex Committee recorded under 12 (I)(e) 2 and (e) (6) of the minutes of the meeting in which moving away from current practice of charging price for land, a new model for licensing of land for setting up industrial undertakings has been agreed to. The intention is to facilitate investment without alienating land and minimizing upfront cost requirement.
It may also be noted that Pakistan’s regional competitors are offering a wide range of incentives to attract investment in the manufacturing sector which extend much beyond offering land at a subsidized cost Further, a comparatively higher cost of energy, power and tax constitutes a major impediment which could be offset by this proposal.
In this regards, PSM Board of Directors in their 433rd meeting held on February 12, 2025 have resolved that they will proceed in the matter in accordance with the directions of the shareholders i.e. MoI&P and the Federal Government. Moreover, PSM has, as on June 2023, an accrued liability of around Rs. 400 billion and land is the primary source to offset it. It is viewed that since this proposal does not involve transfer of ownership of land, the ability to leverage it to offset PSM liabilities at an appropriate stage would stay.
The MoI&P has underscored the need for the establishment of a clear criteria, terms and conditions for allotment of land to industrial undertakings by the Board of Investment (Bol) under the framework approved by Apex Committee. It is also viewed that given resource limitations, it will be difficult to develop industrial estate over the entire land through PSDP funding. Hence a similar criteria, terms and conditions shall be developed by Bol for such private developers who may be interested in land development through their own finance. At the same time, it will be important to arrive at a fair mechanism to define development cost and charges to be paid by industrial undertakings during the term of the license. This mechanism shall also define payments to be made to PSM against its pending liabilities at various stages of the license tenure as part of the charges to be recovered from industrial undertakings and developers.
It may also be noted that Economic Coordination Committee (ECC) of the Cabinet in its decision of December 20, 2023 ratified by the Federal Cabinet on January 10, 2024 had earlier directed Ministry of Industries & Production to immediately stop leasing out of PSM land to any industry, organization, group or individual. Hence, the development of the proposed industrial estate will require reconsideration of this decision by the Federal Cabinet.
In view of the foregoing, following proposals are submitted for consideration and approval of the ECC: (i) the decisions of Sindh Government) may be agreed to in light of the decision of the Apex Committee; (ii) directions may be issued to the Board of Directors of PSM under section 17 of the State-Owned Enterprises (Management & Governance) Act, 2023 for the above purpose; (iii) the Federal Cabinet’s decision of December 20, 2023 prohibiting lease of PSM land may be withdrawn to the extent of the said industrial estate; (iv) Board of Investment may be directed to develop a clear criteria and terms and conditions for the allotment of land to industrial undertakings and private developers (foreign or local) for the development of industrial estate within thirty days; and (v) directions may be issued to PIDC for the formulation of a Master Plan for the development of entire 6409 acres land, including through private developers. Ends
