Govt decides to develop SEZ on PSM land

ISLAMABAD: The federal government has decided to develop a Special Economic Zone (SEZ) on the land of Pakistan Steel Mills (PSM) in two phases.

This includes the creation of a comprehensive and tailored land lease model, which will offer options for sale, land lease, or licensing, based on the investor’s preferences.

The model will feature a robust eligibility criterion. These details were shared by well-informed sources with Business Recorder.

Remaining PSM land: Centre, Sindh agree to establish SEZ

At a recent meeting of the Apex Committee of the Special Investment Facilitation Council (SIFC), Sindh Chief Minister, Murad Ali Shah, informed attendees that the Provincial Cabinet had approved the change in the purpose of the 4,875-acre PSM land, including the transfer of 1,675 unmutated acres, for general industrial use in September 2024.

The meeting decided that the Ministry of Industries and Production should complete the necessary procedures for the transfer and mutation of the land immediately. The PSM land and Karachi Industrial Park (KIP) will be developed together as a single Federal SEZ, which will be named Karachi Industrial Park (Federal SEZ).

A notification to designate the 4,875 acres of PSM land and 1,534 acres of KIP land as the Karachi Industrial Park (Federal SEZ), totaling approximately 6,409 acres, is expected to be issued by February 15, 2025.

According to sources, the phased development of the Federal SEZ will proceed as follows:

Phase 1: Development of the 1,534 acres of KIP land, which is expected to be completed by December 2025 through federal funding (PSDP), with an estimated budget of approximately Rs 30 billion, subject to final approval of the PC-1.

Development works by the appointed developer are set to begin by February 15, 2025. Any concrete proposals for private investment should be evaluated before committing public funding.

Phase 2: Development of the remaining 4,875 acres of PSM land, which is to be completed by June 2027. The Ministry of Industries and Production will process the PC-1 for Phase 1 development to gain approval from the relevant forums immediately.

Both the Ministry of Planning and the Ministry of Finance will allocate funds for the development of the KIP land, ensuring that the timeline is treated as a strategic priority.

Additionally, it was decided that the Board of Investment (BoI), in consultation with SIFC and all relevant stakeholders, will explore the possibility of developing the remaining land using a Government-to-Government (G2G) model, through a developer with PSDP funding.

Ministers for Investment and Industries and Production, along with the Chief Ministers, the Secretary of the BoI, and provincial Chief Secretaries, have been tasked with finalising a land lease/licensing and development model that will attract industrialisation. This will be done in line with the existing policy under Section 16(1)(c) of the SEZ Act.

Current calculations suggest that a land lease/licensing model with a cost of $10,000 per year per acre (with no additional cost or security deposits) would be viable to promote industrialisation and make investment in the SEZs more attractive.

The proposed lease structure applies to seven partially optimised SEZs and one undeveloped SEZ. Land will be available for sale, bankable lease, or licensing, initially for a period of 30 years or more, depending on the investor’s requirements.

The BoI, in consultation with the provinces, will finalise an all-inclusive, tailored land lease model, including options for sale or lease/licensing that suit the investor’s needs. This will be submitted for subsequent approval by the Board of Approvals by February 15, 2025.

Sources added that the use of PSM land (approximately 4,875 acres) for SEZ/industrial purposes will be handled separately, in accordance with the letter from the Government of Sindh dated September 24, 2024.

Copyright Business Recorder, 2025