- KSA is interested in investing between $25 billion and $30 billion in several projects.
- Riyadh has expressed interest in building a refinery worth $10 billion to $12 billion.
- Much-needed progress has been made in addressing the Kingdom’s concerns: officials.
ISLAMABAD: Pakistan needs to address Riyadh’s three main concerns to materialize multi-billion dollar investments in viable copper, minerals, refineries and solar power projects. news reported on Sunday.
The much-touted Special Investment Facilitation Council (SIFC) is jointly supervised and managed by military and civilian authorities and is responsible for removing obstacles to attracting investment.
KSA alone is interested in investing between $25 billion and $30 billion in the aforementioned projects.
First, KSA has expressed interest in building a hub or refinery in Gwadar with an estimated investment of $10 billion to $12 billion. It has been discussed since 2019, but has not yet materialized.
One of the main concerns expressed by the Saudi government was to provide incentives through a long-delayed oil investment policy, mainly due to the 18th constitutional amendment, which also involved the provinces.
Second, the incentives provided were below the desired level. This concern has caused delays in the realization of refinery projects. Concerns were about policy coordination between the Center and the provinces and the smooth and uninterrupted transfer of funds earned from profits and dividends.
Officials currently involved in negotiations with Saudi Arabia claim that long-awaited progress has been made in addressing concerns, as Saudi-specific guarantees have been provided. Both sides are currently awaiting a key event to sign and begin construction on the long-awaited refinery, which will likely attract $10 billion to $12 billion of investment into the hub.
However, an official date has yet to be confirmed.
The Kingdom of Saudi Arabia has also expressed interest in investing in the Reko Diq project, securing a 10-20% stake.
Barrick Gold Corporation, Pakistan’s state-owned enterprises (SOEs), and the Balochistan government will each hold 50% of the shares in the Reko Diq project. Total investment will be $4 billion for Phase 1 and $3 billion for Phase 2.
Production is scheduled to start in 2027-2028. The International Finance Corporation (IFC) provides risk insurance for the execution of these multi-billion dollar projects.
However, Pakistan has decided to sell a 10-20% stake, which would result in it losing management control. Islamabad is trying to persuade Barrick Gold to sell a large number of comparable stakes to avoid management issues in the multibillion-dollar project.
According to some sources, Barrick Gold is reluctant to sell its shares, making it difficult for Islamabad to offer its shares to the Kingdom of Saudi Arabia.
This scribe has directed questions to Barrick Gold Corporation, but has not received a response at the time of filing this report.
When contacted, one of the executives working at SIFC said that a transaction advisor has been appointed to explore various approaches (including valuations) to offer the shares in a strategic sale.
“Our hope is that the government and other shareholders will provide an equal stake for the strategic partnership. Therefore, the governance arrangements will remain in place,” he said, adding that consultation work is still underway. So it is too early to suggest anything, he added.
So far, regulator Nepra has yet to decide on a price for the 600 MW solar power project in which KSA has expressed interest. With the previously proposed tariffs, no investors had expressed interest in investing in this much-needed project.
You have only two options. You can either offer attractive solar rates or leave it to competitive bidding. This policy decision will decide the fate of the 600MW solar power project.