ISLAMABAD: In a significant development, Pakistan has agreed to sell a 15% stake in the multibillion-dollar Reko Diq project to a Saudi investor after Barrick Gold Corporation refused to sell its shares. This move will reduce Pakistan’s overall shares in the project from 50% to 35%.
Out of the remaining 35%, the Balochistan government’s share will stay at 25%, while the federal government’s State-Owned Enterprises (SOEs) stakes will drop from 25% to 10%, making Pakistan a minority shareholder in the project.
A senior government official stated that Pakistan’s experience with joint ventures in sectors like telecommunications and banking guided this decision, ensuring it would not negatively impact the project’s operations. There are clauses in the existing agreement with Barrick Gold that prevent unilateral major decisions, providing Pakistan some leverage in urgent matters.
This agreement comes amid a declining investment-to-GDP ratio, which reached its lowest in 50 years during the 2023-24 fiscal year. The inclusion of Saudi Arabia is expected to improve the investment climate significantly. High-level interactions, such as visits by Pakistan’s Chief of Army Staff General Asim Munir to Saudi Arabia and a subsequent visit by a Saudi minister to Pakistan, have facilitated these investments.
The signing of a Free Trade Agreement (FTA) with the Gulf Cooperation Council (GCC), which includes a Bilateral Investment Treaty (BIT), has been crucial in securing international arbitration rights. The federal cabinet has approved these agreements, awaiting final ratification.
Saudi Arabia’s involvement is through the Manara Minerals Investment Company, a joint venture between the Saudi Arabian Mining Company (Ma’aden) and the Public Investment Fund (PIF), aiming to invest in global mining assets. The Reko Diq Mining Company (RMDC) has been tasked with hiring local levies and defining payment mechanisms for Balochistan.
Negotiations included a graduated approach for resolving investment disputes, mandating an eight-month period for domestic resolution before international arbitration could be sought. This framework will be part of the FTA with GCC countries, ensuring a streamlined process for investor-state dispute settlements.
A formal announcement of the deal is expected soon, marking a pivotal step in enhancing Pakistan’s economic ties with Saudi Arabia and boosting its investment prospects.
Story by Mehtab Haider
