INP-WealthPk

Dhabeji Sez to Uplift Pakistan’s Manufacturing, Logistical and Services Industries

February 01, 2022

By Omer Bilal ISLAMABAD, Feb 01 (INP-WealthPK): Dhabeji Special Economic Zone (SEZ) in Thatta district of Sindh province is a priority project under the industrial cooperation phase of the China-Pakistan Economic Corridor. Developers for Dhabeji Industrial Zone have been finalised under public private partnership (PPP) and overall construction will be completed by the end of 2027. According to the project timeline, the zone will be open for investors in the second quarter of 2022. It is being projected that the estimated investment of $10 billion will uplift manufacturing, logistical and services industries. The estimated cost for the completion of the project is Rs20 billion. The key fiscal enablers, including zone developers, co-developers and zone enterprises, are exempted from income tax for 10 years, according to the Board of Investment (BOI). A BOI senior official told WealthPK that the implementation schedule is being followed according to which investor solicitation is in progress and its completion timeline is 2021-2022, while time lap for construction period is 2022-2027, and industrialisation operation will take off from 2022 onwards. Vide PCT 9917(2), chapter 99, sub-chapter V of the First Schedule of the Customs Act 1969, one-time exemption from all customs duties and tax on import of capital goods to zone developers, co-developers and zone enterprises will be granted, whereas gas and electricity will be provided by the federal government and water supply will be the responsibility of the provincial government. The project was awarded according to the standard set by the BOI. This standard contains three performance security phases. First, performance security – an amount equal to Rs125 million or 1 percent of project cost has to be submitted by the developer at the time of signing of the agreement. Secondly, performance security – an amount equal to Rs375 million has to be submitted by the developer at the time of completion of condition precedents of the PPP agreement after six months from signing date. Thirdly, performance security – an amount equivalent to 50 million to be submitted once both phases are constructed. Performance security shall increase 10% per annum from base amount. In case of failure to achieve completion date, which has been decided in schedule as an annexure, the developer shall pay an amount of Rs1 million for each day. Abdul Azeem Uqaili, CEO of Special Economic Zones Management Company (SEZMC), while talking to WealthPK, underlined the significance of the project, and said it will be the centre of the gravity for upcoming commercial activities as National Highway will be 5km, Karachi-Hyderabad M-9 35km, Port Qasim 22km, Landhi Industrial Area 20km, Hyderabad 140km, and Gwadar at 700km distance from Dhabeji Industrial Zone. He told that under the umbrella of this project, initially four sectors including light industry (furniture, garments, electrical, textiles), halal industry (halal foods, personal care, soft drinks), medium industry (vehicle assembly, auto parts, warehousing and engineering equipment) and large industry (chemicals, foundries – steel, oils) will install their plants. The Government of Sindh has allotted 1,530 acres land to be developed as Dhabeji Industrial Zone in Thatta. In this regard, front desk has been established for international, particularly Chinese investors, to formulate new ventures on the base of PPP. The project is proposed to be implemented in two phases of 750 acres and 780 acres, respectively. The federal government has already approved funds of around Rs4.3 billion to construct a dedicated grid that will provide up to 250 megawatts of power which has to be completed by 2023. The incumbent government has approved funds of Rs429 million for Sui Southern Gas Company (SSGC) to supply up to 15 MMCFD gas for the project, while up to 10 MGD (million gallons per day) water supply connection shall be arranged by the Sindh government through Karachi Water and Sewerage Board (KW&SB). Construction of a dedicated cargo deck connecting the zone with ML-1 from Dhabeji junction is also in the completion phase.