Hopes of Karachi Textile City fetching $2b in exports fading fast

Committee proposes closing project, absence of power and gas cited as main reason

ISLAMABAD: Any hope that the Karachi Textile City will achieve the export target of $2 billion and generate 80,000 jobs has died down after the proposal to close down the under-developed project, says a senior official in the Ministry of Textile Industry.

“A special committee constituted earlier, headed by the finance secretary and comprised secretaries of the ministries of textile and planning, development and reform, had proposed to the prime minister to shut the project and return the acquired land to the Port Qasim Authority,” the official told The Express Tribune.



It was learnt that absence of electricity and gas in the textile city was the prime reason behind the project’s failure and it was not possible to arrange the required electricity supply for the time being.

The committee recommended that after handing over the land to the Port Qasim Authority, outstanding loans against the company must also be shifted to the authority.

The Ministry of Textile Industry holds the Karachi Textile City administration responsible for not developing the land and providing services to attract investors.

So far not a single piece of land has been sold even after seven years of establishment of the textile city.

On its part, the company blamed the government for not taking the project seriously and supporting it by providing a steady stream of gas and electricity, which is a basic requirement for establishing an industrial unit.

The government had acquired 1,250 acres of land from the Port Qasim Authority for establishing the textile city in 2007. The company was established in 2009 and in 2012 the then prime minister Yousuf Raza Gilani inaugurated the city.

However, since then, the authorities have failed to allot even a single plot to the industrialists in order to establish their units.

A loan of Rs2.5 billion had already been acquired from banks for spending on the city’s development as well as its employees, who had been receiving hefty salaries for years.

“The government is making Rs0.6 million interest payment to banks every day and the amount is piling up,” said another ministry official. The federal government has a 40% share in the project whereas the Sindh government has 16% shareholding.

National Bank of Pakistan (NBP) has 8% stake, the Export Processing Zone 4%, Saudi Pak Insurance Company 4%, National Investment Bank 4%, PIDC 1%, Pak Kuwait Investment Company 4% and Pak Qatar Investment Company 4%.



“The city was basically designed to establish 250 industrial units,” said Karachi Textile City CEO Muhammad Hanif, when approached for comments. He acknowledged that not a single piece of land had been sold for the past seven years.

Commenting on the possible shelving of the textile city project, the CEO said it was not possible legally as a number of shareholders and stakeholders were involved and the process would take a long time.

He recommended that the government should focus on arranging gas and electricity supply to the site rather than closing it down so that it could help boost the national economy by creating the estimated 80,000 jobs and enhancing exports to $2 billion.

“The government must provide land for foreign investors to enable them to set up power projects there, which will not only generate electricity, but will also help in meeting the needs of the city,” he added.

He suggested that the project should be turned into a ‘power city’ by developing a coal power plant for electricity generation, which would be more feasible.

Published in The Express Tribune, August 19^th, 2016.

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