Saindak Copper and Gold Project: Centre refuses to hand over ownership till 2018

Cites extended agreement with China as the main hurdle to the transfer

Our Correspondent November 24, 2014

ISLAMABAD: The federal government has refused to hand over ownership of the Saindak Copper and Gold Project to the Balochistan government under the Aghaz-e-Haqooq-e-Balochistan (AHB) package before 2018.

“The Centre has said it cannot transfer the ownership of the Saindak project as long as the extended agreement between Pakistan and China remains intact,” Senator Mir Hasil Bizenjo, the president of the ruling National Party (NP), told The Express Tribune.

Last year, Pakistan and China formally extended the 10-year agreement over the Saindak project by five years, pushing the commitment, which originally spanned between October 2002 and October 2012, till October 2017.

“It’s an international commitment,” said Senator Bizenjo. “We [Balochistan] cannot force the Centre to turn the project over to us,” he added. “We can only request that they give us the royalties promised to us under the AHB package.”

According to Saindak Metals Limited (SML) Managing Director Raziq Sanjrani, however, the extended agreement has never been a hurdle for the transfer of royalties from Saindak to Balochistan.

“Actually, the Balochistan government owes the Centre Rs29.2 billion… that is the main hurdle before the transfer of royalties from Saindak,” he said. “If the federal government waives off these dues, the Saindak project could easily go to Balochistan,” he added.

Sanjrani said Chief Minister Dr Abdul Malik Baloch may take this matter up with Prime Minister Nawaz Sharif in a future meeting of the Council of Common Interests.

Earlier this year, the Ministry of Petroleum and Natural Resources had also sent a summary to the prime minister seeking the transfer of the Saindak project, a senior SML official said. But the finance ministry refused to waive off the dues linked to the transfer and advised the prime minister to reject the proposal.

“The finance division believed accepting the proposal would embolden other provinces to come up with similar demands,” the official added.

Under the AHB package, Balochistan will receive 35% of sales proceeds from minerals extracted from Saindak mines if it gains administrative control of the SML, according to working papers submitted to the Senate functional committee on the problems of less developed areas. The papers revealed that while proceeds from Saindak are split halfway between Pakistan and China, only 5% are given to Balochistan.

From 2003 to 2013, an estimated 177,036 million tons of blister copper was extracted from Saindak and sold for around $1.6 billion by the SML, the papers stated. Some $269 million – half of the proceeds Pakistan received – were kept under the head of profit and lease rent, they revealed. Around $17 million went to the head of presumptive tax and $8 million was kept by the federal government as development surcharge. Balochistan only received $9 million from the $1.6 billion sale, the papers added.

Published in The Express Tribune, November 24th, 2014.

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