Pakistan scrambles to allay Saudi Arabia concerns

Govt sets tight deadlines after Riyadh seeks more investment protection

ISLAMABAD:

Saudi Arabia has raised concerns over protection of its investments and rights in Pakistan, prompting an immediate wholesome review of the situation and setting of tight deadlines by Pakistani authorities to materialise the much-needed investment in Reko Diq gold and copper mines.

Highly placed sources told The Express Tribune that a Saudi Arabian delegation, which visited Pakistan last month, showed interest in bringing investment in major projects subject to the resolution of certain issues.

According to the sources, the military brass had been briefed about the concerns in the fourth meeting of the Apex Committee of the military-dominated Special Investment Facilitation Council (SIFC).

As a result, Chief of the Army Staff Gen Asim Munir urged the interim federal ministers and the bureaucrats concerned to immediately lay out the plans to get foreign investment and remove all of the obstacles.

Pakistan eyes around $25 billion investment from Saudi Arabia, of the $60 to $70 billion that it hopes to get under the SIFC umbrella in the next three to five years. A Saudi delegation had visited Pakistan in the first half of the last month in which it laid out the issues and sought their resolution.

Saudi Arabia wants to make investment in mines, mineral, power, agriculture and plasma products. However, the apex committee was informed that Saudi Arabia raised the issue of hurdles in repatriation of dividends by the foreign investors.

The State Bank of Pakistan (SBP) is not allowing free outflow of the dollar due to thin positions of the foreign exchange reserves that has created serious resentment among the existing and the new foreign investors.

Also read Pakistan eyes $25b Saudi investment

The sources said that Saudi Arabia also enquired about the regime in place for its investment protection and issues related to dispute resolution mechanism.

The Saudi delegation also demanded additional benefits on its investment. But the details of these additional benefits were not known.

The Saudi delegation was particularly concerned about the investment proposals floated by two of its companies, Aramco and ACWA Power, which are interested in setting up oil refineries and investing in the renewable energy projects, the sources said.

The SIFC has been set up with a mandate to revive Pakistan’s economy and attract foreign investment aimed at getting rid of foreign bailouts by the International Monetary Fund (IMF) and other multilateral institutions.

The sources said outdated procedures and the bureaucratic hiccups were hampering swift implementation on the SIFC’s initiatives. Because of this reason, the prime minister and the army chief decided to take briefings from the ministries concerned during the fifth apex committee meeting, which began on Friday and may continue until Sunday.

Caretaker Prime Minister Anwaarul Haq Kakar also urged his cabinet ministers to focus on both the short- and medium-term initiatives for sustained economic development and growth.Tight deadlines for Reko Diq project

For diluting some of Pakistan and Barrack Gold’s stakes in Reko Diq in favour of Saudi Arabia at the earliest, the Pakistani authorities took certain decisions in the fourth meeting of the apex committee to set the ball rolling, the sources said.

It was decided that the energy ministry would harmonise the national mineral policy, as well as the regulatory, legal and investment frameworks by March next year.

Similarly, the provincial governments have been instructed to provide necessary support for timely completion of these tasks.

Saudi Arabia has shown interest in making multibillion-dollar investment in the Reko Diq project and the country’s leadership is interested to capitalise on it at the earliest. However, the project’s bankable feasibility study has not yet been completed.

The SIFC has also approved to exempt the hiring of financial advisers by Pakistan from the Public Procurement Regulatory Authority (PPRA) rules aimed at achieving the deadlines set to dilute Reko Diq shares in favour of Saudi Arabia, according to the sources.

The SIFC also allowed the energy ministry to engage the White & Case –a foreign legal adviser, Haidermota & Co – as local legal adviser, the DMT as technical consultant and the Lazard as financial adviser for the Reko Diq project, the sources said.

The finance ministry and the SBP had been instructed by the SIFC to facilitate foreign currency payment by the Pakistani shareholders of the Reko Diq project to make payments to the advisers, the sources said.

The SIFC has also approved negotiation and oversight committees of the Reko Diq project for negotiations with Saudi Arabia. It was also decided that ministries concerned would devise and upgrade existing brownfield investment opportunities through the platform provided by the SIFC to ensure new investment in these projects.