LAHORE -  To promote industrialisation and generate employment in the province, the Punjab government has drafted a new land lease policy which will be enforced after due approval of the Punjab government.

Once the procedural formalities are completed, the Punjab government will be allowed to transfer leasehold rights instead of freehold under the Land Acquisition Act, 1894 and Transfer of Property Act, 1882 to investors subject to prior approval of the government.

Official sources say the Punjab Industries, Commerce and Investment (IC&I) has drafted the policy. Since the policy involves financial and legal issues pertaining to land, therefore, the summary is being routed through BOR, Finance and Law Departments for adding their views. After vetting by the BOR and other relevant departments, it would be forwarded to the CM office through the Chief Secretary.

As per the summary, the Industries, Commerce & Investment Department is of the considered opinion that in order to facilitate local and foreign industrialists, a Land Lease Policy (LLP) may be introduced by the Government of Punjab. The purpose is to promote industrialisation in order to achieve growth targets and employment generation. This will be in addition to facilitation of land acquisition on the behalf of industrialist or industrial estate developers for setting up industries in the province at their own cost (of land).

Presently, Punjab Industrial Estates Development and Management Company (PIEDMC) has ten 10 industrial estates, out of which 3 - Bhalwal Industrial Estate, Vehari Industrial Estate and Rahim Yar Khan Industrial Estate - are at various stages of development and 3 - Chunian Industrial Estate, Bahawalpur Industrial Estate and Quaid-e-Azam Apparel Park Sheikhupura - are yet undeveloped. Besides, 4 industrial estates - Sundar Industrial Estate, Quaid-e-Azam Industrial Estate, Multan Industrial Estate (Phase-I) and Multan Industrial Estate (Phase-Il) - are developed and almost colonised. The said industrial estates are either in the ownership of PIEDMC as per land mutation record or transferred by the Board of Revenue, Punjab on deferred payments to the PIEDMIC.

Punjab Industrial Estates Development and Management Company (PIEDMC) engaged Grant Thornton, a financial consultant, who in coordination with the relevant stakeholders reviewed the current status of industrial estates. The PIEDMC also sought opinion from some law firms. All have reportedly concurred that the PIEDMC can transfer leasehold rights instead of freehold under the Land Acquisition Act, 1894 and Transfer of Property Act, 1882 to investors subject to prior approval of the government. The PIEDMC has further proposed two models for rental arrangements as well, the document said.

Lease Two: The salient features of proposed land lease policy for developed land and undeveloped land are different.

The land will be rented out to investor for a period of 30 years with renewal option. Within 24 months of signing the lease agreement, investor will be required to complete the construction and start operations.

No escalation in lease will be made, cost of land and development to be borne by government of Punjab.

About the annual payment from investor, the policy says it will include the recovery of capital expenditure within 30 years period without any return, operational and maintenance costs.

For the undeveloped land lease model, the terms are different.

Transaction shall be executed under BOT mode. The concessionaire shall be responsible to finance, build, operate and maintain industrial estate for the concession period at its own risk, cost, and expenses and government will provide the land. Within 36 months, the investor will be required to develop the land for the said purpose.

At the end of lease period, industrial estate will be transferred to PIEDMC.

Moreover, annual lease payment from the concessionaire will include recovery of land cost (actual cost + markup) within 30 years without any profit or inflation. The concessionaire will recover investment within concession period of 30 years including 36 months development period.

BOR’s former member colonies said the policy was being made as the Punjab government former plan to develop industry had badly failed. Majority of those who purchased plots never set up factories. The policy would attract the foreign investors particularly from China who want to invest in Punjab.