New plant environment assessment: Pak Suzuki shares report with Sindh government

Plans expansion on hopes country’s economic situation will improve

Usman Hanif November 28, 2019
Initially, the plant will have the capacity to produce 120,000 four-wheelers per annum but later it will be enhanced to 200,000 vehicles per year. PHOTO: AFP

KARACHI: While the economy is experiencing a slowdown and the automobile sector has been badly hit, Pak Suzuki Motor Company sees light at the end of the tunnel as it plans to expand its plant.

According to the environmental impact assessment (EIA) of Pak Suzuki Motor’s expansion project posted on the Sindh Environmental Protection Agency (Sepa) website, the company would construct the new plant adjacent to its existing plant at the Pakistan Steel Industrial Estate, Karachi.

The plant would occupy an area of 75.062 acres and would include storage areas and an internal road network.

Suzuki Motor Corporation Japan, the parent company of Pak Suzuki Motor, would fund the project with an investment of $450 million. Initially, the plant will have the capacity to produce 120,000 four-wheelers per annum but later it will be enhanced to 200,000 vehicles per year.

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“We have submitted our environmental impact assessment report to the Sindh government and now it is undergoing the review process,” said Pak Suzuki Motor environmental consultant Saquib Ejaz Hussain while talking to The Express Tribune. “The company is hopeful that the economic situation of the country will improve, hence, it intends to expand its business.”

He added that the first step of the review process was a public hearing, which had been conducted successfully.

“The second step is the expert committee review which is in process,” he said. “In this stage, Sepa forwards the report to different experts for assessment after which it gives approval or rejection.”

Hussain disclosed that the automaker was awaiting various regulatory approvals following which it would press ahead with its plans.

“Besides these hurdles, the company is closely monitoring the economic situation and government’s policies, particularly the ones concerning new plants,” the official pointed out.

In late 2018, some reports appeared in the media, stating that Pak Suzuki Motor was willing to invest $450 million provided the company was granted the green-field status, which was offered by the government to new entrants in the auto sector.

At that time, Adviser to Prime Minister on Commerce Abdul Razak Dawood promised to grant green-field status to Pak Suzuki’s planned expansion project, which sparked protests by the new entrants who considered the move unjust and against the government’s desire of providing them with a level playing field. The automobile sector of Pakistan is going through a difficult phase as prices of cars have skyrocketed after the central bank let the rupee depreciate massively against the US dollar in the past around one and a half years coupled with high interest rates on auto financing.

In October 2019, car sales plunged 56% year-on-year to 10,853 units against 24,850 units in the same month of the previous year, according to the latest data released by the Pakistan Automotive Manufacturers Association (Pama).

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“The company planned the plant expansion one and a half years ago when the country’s economy was in better shape,” said the consultant. “The company submitted its report to Sepa more than three months ago.”

He pointed out that the company might wait for an appropriate time to expand but because government processes took time, it wanted to get mandatory approvals beforehand.

On the other hand, Pak Suzuki Motor Company Head of Public Relations Shafiq Ahmed Sheikh said the company applied to Sepa around 14 months ago when the government gave verbal approval to Pak Suzuki’s huge foreign direct investment proposal for the new green-field plant.

“The government has so far not attached any importance or provided the approval to the Pak Suzuki’s initiative, therefore, the company may freeze its investment in the new plant,” he said.

Published in The Express Tribune, November 28th, 2019.

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