It has been in news for months that the French automaker Renault is setting up a manufacturing plant in Pakistan to start car production in the country. Well now it has faced a major setback as Pakistan Steel Mills (PSM) did not agree to provide Renault the land for the facility.
Ministry of Industries and Production senior official revealed that Renault authorities have issued a complaint to the Ministry that the National Industrial Parks Development and Management Company (NIP) is demanding the automaker to sign an agreement saying clearly that any rise in land cost will be provided by the company for developing a vehicle manufacturing plant in Karachi city.
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Renault collaborated with Al-Futtaim Automotive Pakistan (Private) Limited to set up a plant in Pakistan over an allocated land of 50 acres for Rs1.3 billion. The price has to be paid in three equal installments. But the PSM board of directors felt that they can demand new price for the allocated land and ask for more money than what was decided initially.
Economic Coordination Committee (ECC) in January 2007 approved that an industrial park can be established on PSM land for the price Rs7 million per acre, that will be paid by both sides. Thus an agreement was signed in July 2007 between PSM and NIP.
Now PSM board has revised the prices and Ministry of Industries are not happy. In a meeting held in Feb 2018 the cabinet was informed that since 2013, PSM has been changing the land price for one reason or another, forcing investors to back out. Cabinet members in the meeting felt that Pakistan is receiving foreign investment, new companies are more open to invest in the country, thus companies in Pakistan should not treat the foreign investors unfairly.
When a French company will invest in Pakistan, it will bring economic benefit in the country and open further investment doors thus the cabinet has decided to resolve this major land lease issue. Let us see when and how this issue will be solved.