Goodwill spirit: Centre likely to waive Rs29 billion investment in Saindak project

Committee working on transfer of project ownership to Balochistan.

ISLAMABAD: The federal government is expected to waive a Rs29 billion loan given for the Saindak gold and copper project in Balochistan as a goodwill gesture to strengthen relations between the centre and the province.

According to sources, the federal government is going for the concession after the Balochistan chief minister insisted that the loan amounting to Rs29.234 billion, invested by the centre, should be waived before transfer of the gold and copper mining project to the province.

An advisory committee comprising representatives of the Ministry of Petroleum and Finance as well as the Government of Balochistan is working on the modalities for the transfer of project ownership to Balochistan under the Aghaz-e-Haqooq-e-Balochistan package.

The Ministry of Petroleum has sent a letter to the Finance Division, asking it to abandon the right to recover the loan for a smooth handover of project ownership to the province. However, the finance division is yet to respond.



“A summary for the prime minister’s order on Balochistan’s request for transfer of project ownership by giving up the recovery of government of Pakistan’s investment as a goodwill gesture is under process,” an official said.

Earlier, the management of Saindak Metal Limited had asked the federal government to either transfer the company to Balochistan without any liability or keep 10% shares against its investment.

The Balochistan government argues that the federal government has not given any loan to the company, rather it is an investment and the centre cannot declare the investment a loan.

During trial production in 1995, the Saindak project produced 1,500 tons of blister copper, but the venture could not kick off because of shortage of trained manpower and working capital. The government is bearing an expenditure of Rs300 million annually on staff salaries and maintenance of machinery and other facilities.



In a meeting held in February 2000, the cabinet constituted a committee that recommended that the project should be given on lease to Chinese partner Metallurgical Corp of China (MCC). Thereafter, a lease contract was signed with MCC on November 30, 2001 for 10 years.

Commercial production started in 2003 following $35 million investment in rehabilitating the plant. Saindak Metal Limited gets $250.682 million on account of profit share and rent whereas profit share of the Chinese company stands at about $245.682 million for 2003 to 2012.

Since the start of operations, 161,267.954 tons of copper, 14.657 tons of gold and 21.125 tons of silver have been sold. Total revenue for 2003 to 2012 stands at $1.24 billion.

Published in The Express Tribune, September 14^th,  2013.

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