ISLAMABAD (National Times) Pakistan and Saudi Arabia have agreed in principle to strike a deal whereby Islamabad is ready to sell its 15% shares in the Reko Diq project to Saudi investors, according to a The News report.
The decision was taken after Barrick Gold Corporation refused to sell out its stakes in the multibillion-dollar project.
With this development, Pakistan’s overall shares in the Reko-Diq project are expected to be reduced from the existing 50% to 35%.
Out of 35%, the Balochistan government’s share would remain at the existing level of 25%, while the federal government’s State-Owned Enterprises (SOEs) stakes would be reduced from 25% to 10%.
“With this development, Pakistan will become a minority shareholder in this project,” official sources told the publication.
One top government official, when contacted, said that Pakistan possessed experience in running certain companies in joint ventures with international players; so keeping in view experience in the case of PTCL and the banking sector, it is a conscious decision of the government that the conversion into minority shareholder in Reko Diq project would not become a problem for any practical purpose.
Another official said there are certain clauses in the existing arrangement of Reko Diq whereby Barrick Gold would be bound not to take any major decision unilaterally, especially related to investments.
“Pakistan will be able to invoke such clauses in case of any urgent needs,” said the sources.
Amid dwindling investment-to-GDP ratio that had touched the lowest ebb of the last 50 years since 1972-3 during the outgoing fiscal year 2023-24, a breakthrough is expected for striking a deal in the Reko Diq with the involvement of Saudi Arabia which would play a critical role for improving investment climate.
Two top functionaries confirmed to The News on Thursday that the much-awaited development had achieved a breakthrough and a formal announcement was expected anytime within the next few weeks.
“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 future,” they told The News on Thursday.
With the help of the Special Investment Facilitation Council (SIFC), a consultant was hired, who submitted its valuation report that paved the way for selling out stakes in the Reko Diq project.
The signing of the Free Trade Agreement (FTA) with the Gulf Cooperation Council (GCC) would play a critical role, as the Bilateral Investment Treaty (BIT) is one of its components under which Islamabad had provided the right of international arbitration.
“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,” said the official, adding that Chief of Army Staff (COAS) General Asim Munir had recently visited Saudi Arabia and then a Saudi minister also visited Pakistan. Therefore, such high-level interactions helped push these multibillion-dollar investments.
Under the ratification of FTA and part of it in the shape of BIT, Pakistan accepted demands for allowing to approach the Permanent Court of Arbitration (PCA) or International Centre for Settlement of Investment Disputes (ICSID) in case of any disputes on multibillion-dollar investment projects.
Saudi Arabia and Pakistan negotiated the finalisation of the term sheet and valuation. The Manara Minerals Investment Company is a new venture between the Saudi Arabian Mining Company (Ma’aden) and the Public Investment Fund (PIF) to invest in mining assets globally and support the development of resilient global supply chains.
The Reko Diq Mining Company (RMDC) has been assigned to hire levies and payment mechanisms defined for Balochistan.
Pakistan has negotiated to include a graduated approach for the settlement of investment disputes between the state and investors. Through this arrangement, there will be a mandatory eight-month period to resolve the dispute at the domestic forums.
In the case of non-resolution of disputes, it was agreed that recourse could be made to PCA or ICSID as international arbitration forums.
The investment chapter can be annexed with the FTA to be signed with the GCC countries, including the process of investor and state dispute settlement through the ICSID as agreed with Saudi Arabia and Qatar, which was also shared with the GCC Secretariat.
The GCC side also said that the legally cleansed draft will be shared with the Pakistani side in due course of time.
