MUSHATQ GHUMMAN
ISLAMABAD: The Pakistan Steel Mills (PSM) Board of Directors (BoD) has approved the price of Rs 22 million per acre of 526 acres of unallocated land in the NIP-BQIP and Rs 35 million per acre for commercial (“high rises”) plots for 2017-18, well-informed sources in Privatisation Commission told Business Recorder.
The decision was taken at a Board’s meeting held on March 16, 2018 in Karachi which was not attended by at least four Board members.
Secretary Privatisation Commission, Irfan Ali invited a valuator to explain the methodology adopted by him in the valuation process. The valuator explained his methodology in detail. He informed the Board regarding prevailing prices in various industrial areas of Karachi. He also identified the comparisons taken by him for valuation purposes.
He explained at length the prices of industrial plots prevailing in the neighbourhood, i.e., Port Qasim Western Industrial Zone, the National Highway, etc. The valuator added that land value in other industrial zones of Karachi such as SITE, Korangi, Landhi etc.is approximately Rs. 120-150 million per acre. Though the plots in these industrial zones are small in sizes, the land is fully developed and occupied.
Secretary, Privatisation stated that Port Qasim has developed its infrastructure while NIP has no infrastructure in place. He, therefore, asked the valuator as to how the two can be compared. The valuator clarified that NIP was an SEZ or a special economic zone, yet they have valued its land at 50% to 60% of land along main National Highway and PQA western industrial zone.
Secretary PC further inquired as to how the price jumped from Rs. 13 million per acre to Rs 22 million per acre in two years. The valuator responded that better law and order situation and increasing pace of industrialization are the factors behind rising price. Besides, the NIP plots are in great demand.
Dr Iftikhar Ali Shallwani, Additional Secretary Ministry of Industries and Production, added that NIP land must not be compared with the neighboring industrial areas’; instead it must be compared with Special Economic and Industrial Zones and free trade areas of Sharjah, Dubai, Ajman etc.
Chairman Board maintained that the valuator has valued the land without being influenced by special features of an SEZ and the approach of valuation has been conservative. He stated that there are a number of value-additive factors for NIP land, such as attractive location, payment in installments, tax free status for 10 years and the permission to import various items, including used machinery, on tax exemptions with many other incentives appearing in the statement of objective declaration by the Ministry and Board of Investment (Bol). Considering these factors, Rs. 22 million per acre is a fair valuation. The Secretary PC added that if the Board agrees to the valuation then it should be conveyed to M/s NIP.
The Chairman PSM Board asked each member of the board to comment on the valuation undertaken by the valuator after deliberations by the valuator as to all the aspects undertaken.
The Board concurred with the valuation undertaken by the valuator. Mohammad Raziuddin argued that the valuation was still on the lower side. His views were endorsed by the representative of Ministry of Industries and Production Iftikhar Shallwani.
After deliberations, the Board agreed with the valuation under taken by the valuator in respect of un-allotted land (526 acres approximately) in the NIP-BQIP at Rs 22 Million per acre for industrial plots and Rs. 35 million per acre for Commercial (high rises) plots for the year 2017-18. PSM management shall share the valuation with NIP for concurrence in terms of clause-5.1 of the agreement between PSM and M/s NIP.”
