Qatar did not offer $2b in cash

ISLAMABAD:

Qatar has not offered immediate provision of $2 billion in cash to Pakistan but renewed its interest in buying the two LNG-fired power plants that Islamabad was initially reluctant to sell without a competitive bidding process.

“Doha seems more interested in making investments in various sectors than offering cash to immediately bail out Islamabad,” a government official said after the three-day visit of Prime Minister Shehbaz Sharif on Thursday.

“After the $3 billion investment commitment by Qatar, there is no funding gap, hence, no immediate requirement for the $2 billion cash,” Finance Minister Miftah Ismail said when contacted.

Last week, the acting State Bank of Pakistan governor indicated that Qatar might provide $2 billion in bilateral support without identifying the source of funding.

The International Monetary Fund (IMF) has asked Pakistan to increase the gross official foreign exchange reserves to $16.2 billion by June next year, pointing out a hole of $4.5 billion that has to be filled by securing commitments from the bilateral creditors.

Qatar’s policy of no-cash but investment is in line with the policies that Saudi Arabia and the United Arab Emirates have adopted this time towards Pakistan, breaking the past practice of signing off big loan cheques that Islamabad never paid back.

The king of Saudi Arabia on Thursday also directed to make a $1 billion investment in Pakistan after a similar announcement was made by the UAE a few days ago.

The materialisation of these investments worth $5 billion from the three countries would require a strong commitment from the government of Pakistan, which will also keep it on track to follow the procedure prescribed by the IMF.

Qatar, through its $425 billion sovereign wealth fund, has shown its intent to make $3 billion investment in airports, power plants, port terminals, solar energy and the stock market. However, another aide to the prime minister said that the Qatar Investment Authority was not keen to invest in oil and gas sectors; rather it was more interested in diversifying its investments.

A member of the PM’s delegation said that Qatar again showed its interest in investing in LNG-fired Haveli Bahadur Shah and Baloki power plants. It was not Pakistan that offered the power plants rather the Qatari government showed interest, he added

Last week, the government had decided to shelve the plan to sell these power plants to Qatar due to anticipated low sale price, excluding the liabilities. There was a view that the government might get $500 million to $600 million at best, which was politically difficult to sell to the people as the best price, they added.

The Power Division had also advised the prime minister that determining the price of the plants was not immediately possible and there was a need to hire consultants to complete the transaction.

The National Power Parks Management Company Limited (NPPMCL) owns 1,230 megawatts (MW) Haveli Bahadur Shah and 1,223MW Balloki power plants. These power plants were set up with government funding instead of the 70:30 debt-to-equity ratio. The Ministry of Finance had bought the equity of these power plants a few years ago through the Pakistan Development Fund proceeds.

The government official said that the sale of the Roosevelt Hotel, New York, and the Pakistan International Airlines (PIA) did not come under discussion. The Roosevelt Hotel is owned by the PIA through PIA-Investment Limited. The PIA-IL holds its stakes through a subsidiary which is registered in the British Virgin Islands. The hotel, located at a highly priced location, was closed in December 2020.

But Qatar offered to invest in the Islamabad International Airport and the Jinnah International Airport, Karachi.

The government official said that the materialisation of $3 billion investment by Qatar would depend upon how quickly the issues are being sorted out. He said that PM Shehbaz instructed to set up a monitoring and implementation cell to materialise the investment.