Saudi Arabia will purchase a 15% share in Pakistan’s Reko Diq project
Pakistan and Saudi Arabia have reached an agreement in principle for Islamabad to sell its 15% stake in the Reko Diq project to Saudi investors.
Following Barrick Gold Corporation’s refusal to sell all of its interests in the multibillion-dollar project, a decision was made.
Pakistan’s total stake in the Reko-Diq project is anticipated to drop from its current 50% to 35% as a result of this move.
The current 25% share of the Balochistani government would stay out of the 35% total, while the federal government’s State-Owned Enterprises (SOEs) would see a decrease in ownership from 25% to 10%.
Pakistan will now maintain a minority stake in the project, according to official sources who spoke with the publication.
When contacted, a top government official stated that Pakistan had experience managing certain businesses in joint ventures with foreign entities. Therefore, the government made the deliberate decision that the conversion to a minority shareholder in the Reko Diq project would not present a practical issue, taking into account the experience in the banking sector and with PTCL.
According to an additional official, Barrick Gold is obligated by specific provisions of the current Reko Diq arrangement to refrain from making any significant decisions on its own, particularly those pertaining to investments.
The sources stated that Pakistan would be able to apply these clauses in the event of an emergency.
In the midst of a declining investment-to-GDP ratio that reached its lowest point in the previous 50 years during the fiscal year 2023–2024, a breakthrough in resolving the Reko Diq with Saudi Arabia’s involvement is anticipated, which would be crucial for enhancing the investment climate.
The News was informed on Thursday by two high-ranking officials that the much awaited progress had made headway and that a formal declaration was anticipated in the coming weeks.
According to a statement made on Thursday to The News, Saudi Arabia “will be involved in the Reko Diq project and they intend to increase their stakes in more blocks of the Reko Diq in the future.”
A consultant was hired with the assistance of the Special Investment Facilitation Council (SIFC), and upon submission of their valuation report, the sale of interests in the Reko Diq project was made possible.
Islamabad had granted the right to international arbitration under the Bilateral Investment Treaty (BIT), which is one of the components of the Free Trade Agreement (FTA) that would be signed with the Gulf Cooperation Council (GCC).
The official stated, “The Chief of Army Staff (COAS), General Asim Munir, recently visited Saudi Arabia, and subsequently a Saudi minister visited Pakistan. The federal cabinet, during the tenure of the caretaker government, had approved and ratified the FTA and BIT with the GCC and now awaits their ratification for signing it.” Consequently, these high-level contacts aided in promoting these multibillion-dollar investments.
Pakistan agreed to demands made by the International Centre for Settlement of Investment Disputes (ICSID) and the Permanent Court of Arbitration (PCA) for access to arbitrate disputes involving multibillion-dollar investment projects following the ratification of the Free Trade Agreement (FTA) and a portion of it in the form of the Bilateral Investment Treaty (BIT).
The finalization of the term sheet and valuation was negotiated between Pakistan and Saudi Arabia. The Public Investment Fund (PIF) and the Saudi Arabian Mining Company (Ma’aden) have formed a new company, Manara Minerals Investment Company, to invest in mining assets worldwide and promote the establishment of robust global supply chains.
The task of hiring levies and payment methods specified for Balochistan has been given to the Reko Diq Mining Company (RMDC).
Pakistan has reached a deal that calls for the state and investors to settle investment problems through a tiered process. Under this structure, the disagreement must be resolved in the domestic forums within eight months.
It was decided that recourse to PCA or ICSID as international arbitration tribunals would be available in the event that disputes could not be resolved.
The investment chapter, which includes the procedure for investor and state dispute settlement through the ICSID as negotiated with Saudi Arabia and Qatar and shared with the GCC Secretariat, can be added to the free trade agreement to be completed with the GCC countries.
The GCC side added that the Pakistani side will receive the legally cleared draft when the appropriate moment comes.
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