Pakistan and Saudi Arabia have reached a tentative agreement to sell Islamabad’s 15% shares in the Reko Diq project to Saudi investors, reports The News. This decision comes after Barrick Gold Corporation declined to sell its stakes in the multibillion-dollar project.
With this development, Pakistan’s overall shares in the Reko-Diq project are anticipated to decrease from the current 50% to 35%. Out of this 35%, the Balochistan government will retain its existing 25% share, while the federal government’s State-Owned Enterprises (SOEs) stakes will decrease from 25% to 10%.
According to official sources, Pakistan will become a minority shareholder in the project following this move. They cited the country’s experience in running joint ventures with international players, such as in the case of PTCL and the banking sector, as a factor informing this decision.
Additionally, there are clauses in the existing agreement with Barrick Gold that prevent unilateral major decisions, especially regarding investments. Pakistan can invoke these clauses in case of urgent needs, sources added.
The involvement of Saudi Arabia in the Reko Diq project is expected to significantly enhance the investment climate amid a low investment-to-GDP ratio, which reached its lowest point in 50 years during the outgoing fiscal year 2023-24.
Top officials confirmed to The News that a breakthrough in the negotiations had been achieved, and a formal announcement is expected in the coming weeks. Saudi Arabia intends to increase its stakes in more blocks of the Reko Diq project in the future.
The Special Investment Facilitation Council (SIFC) facilitated the hiring of a consultant who submitted a valuation report, paving the way for the sale of stakes in the project.
The signing of the Free Trade Agreement (FTA) with the Gulf Cooperation Council (GCC) is crucial, as it includes the Bilateral Investment Treaty (BIT), allowing international arbitration in case of disputes.
High-level interactions between Saudi Arabia and Pakistan, including visits by Chief of Army Staff (COAS) General Asim Munir and a Saudi minister, helped push forward these investments.
Saudi Arabia and Pakistan negotiated the finalization of the term sheet and valuation. The Manara Minerals Investment Company, a new venture between the Saudi Arabian Mining Company (Ma’aden) and the Public Investment Fund (PIF), will invest in mining assets globally and support the development of resilient global supply chains.
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 International Centre for Settlement of Investment Disputes (ICSID), as agreed with Saudi Arabia and Qatar.
