The federal government has decided to establish a Special Economic Zone (SEZ) on Pakistan Steel Mills (PSM) land in two phases, introducing a structured land lease model to attract investors. The model will offer options for land sale, leasing, or licensing, based on investor preferences, with strict eligibility criteria.
According to a news report, at a recent meeting of the Apex Committee of the Special Investment Facilitation Council (SIFC), Sindh Chief Minister Murad Ali Shah informed participants that the provincial cabinet had approved repurposing 4,875 acres of PSM land, including 1,675 unmutated acres, for general industrial use in September 2024.
The Ministry of Industries and Production has been directed to expedite the land transfer process. The SEZ will combine PSM land with Karachi Industrial Park (KIP), creating a single federal SEZ named Karachi Industrial Park (Federal SEZ).
A notification designating 4,875 acres of PSM land and 1,534 acres of KIP land as Karachi Industrial Park (Federal SEZ), totaling approximately 6,409 acres, is expected by February 15, 2025.
The development will be carried out in two phases. The first phase, covering 1,534 acres of KIP land, is set to be completed by December 2025 with federal funding of approximately Rs30 billion, subject to PC-1 approval.
Construction is scheduled to begin on February 15, 2025, and private investment proposals will be evaluated before committing public funds.
The second phase, covering 4,875 acres of PSM land, is planned for completion by June 2027. The Ministry of Industries and Production will submit PC-1 for Phase 1 development for immediate approval. The Ministry of Planning and the Ministry of Finance have been directed to allocate funds, prioritizing the project as a strategic initiative.
The Board of Investment (BoI), in consultation with SIFC and other stakeholders, will explore a Government-to-Government (G2G) development model using a private developer with Public Sector Development Programme (PSDP) funding. The federal and provincial governments will finalize a land lease and licensing framework under Section 16(1)(c) of the SEZ Act to attract industrial investment.
A proposed lease model suggests a cost of $10,000 per acre per year, without additional costs or security deposits, to encourage industrialization. This structure will apply to seven partially optimized SEZs and one undeveloped SEZ. Investors will have the option to purchase land or acquire it on a bankable lease or licensing basis for an initial period of 30 years or more.
The BoI, in coordination with provincial authorities, will finalize the land lease model and submit it for approval by the Board of Approvals by February 15, 2025. The repurposing of PSM land for SEZ and industrial use will be managed separately, in accordance with a directive from the Government of Sindh issued on September 24, 2024.
