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Rashakai SEZ under CPEC to be leased out to a Chinese firm for 30 years

While waiving off annual fee of $700,000 for striking concession agreement, Pakistan and Chinese sides have agreed in principle to lease out Special Economic Zone (SEZ) at Rashakai to contracting firm CRBC for 30 years with the obligation to invest $128 million for development of 1000 acres area on Built-Operate and Transfer (BOT) basis.

For first SEZ at Rashakai, both the sides have agreed that the workforce ratio of 80:20 percent will be adopted for Pakistan and Chinese nationals to make it operational. The Chinese human resource is supposed to train Pakistanis in state of the art technologies.

Prime Minister Imran Khan has been briefed on SEZs under China Pakistan Economic Corridor (CPEC) here on Friday and apprised him that Chinese potential investors were ready to relocate around 22 industrial units with potential investment of $1.04 billion in shape of joint venture and standalone initiatives. The Chinese investors are interested to avail SEZs at Faisalabad for sectors of chemicals, engineering, textile and others.

“In order to reduce cost of land, the provincial KP government has waived off fee demand of $700,000 under concession agreement from Chinese firm CRBC for the purpose of development of SEZ at Rashakai and then its handling for 30 years on BOT basis. The CRBC will invest $120-128 million for development and handling of 1000 acres of land. The area of 700 acres will be developed for the purpose of placing industrial units in three phases,” top official sources confirmed to The News here on Friday.

This draft concession agreement is expected to be signed during the upcoming visit of Prime Minister Imran Khan to China by end of the ongoing month.

First, it was considered to ban selling of plots at SEZs but it was finalised that the lease agreement to interested parties for period of 99 years will only be issued when they will start commercial their operation after construction of premises of industrial units. “We are worried about non utilization of SEZs for the purpose of minting money through real estate and second provision of utilities such as electricity and gas,” added the sources.

The KP government acquired 1000 acres of land for Rashakai Economic Zone as it will be developed in three phases over 6 years period. The first phase will be developed in first 2 years.

The Sindh government had adopted the path of open bidding for hiring firm to develop its economic zone at Dhabeji but the KP government preferred to go for G2G (Govt to Govt) agreement in order to avoid open bidding under the requirement of PPRA rules with the argument to save the time.

The Khyber Pakhtunkhwa Economic Zone Development and Management Company has established Rashakai economic zone in district Mardan which is 57km away from Peshawar airport, 1584km away from seaport of Karachi, 10km away from railway station, 19km away from dry port, 4km away from motorway at Col Sher Khan interchange at Motorway, 13km away from highway and 13.6km away from city center.

The establishment of SEZ with successful model and relocation of industries from China will be the most critical part for Pakistan’s economy in the wake of dwindling exports and capability of the country to generate the required exportable surplus to come out from the existing economic morass.

Pakistan’s experience for establishing SEZs in the past had met with failure by and large because these SEZs became hot potato in terms of selling plots after provision of basic utilities. Now the upcoming SEZs should be developed for the purpose of industrialization instead of selling plots of real estates.

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