DUBAI: A record investment package being prepared by Saudi Arabia forPakistan will likely provide welcome relief for its cash-strapped Muslimally, while also addressing regional geopolitical challenges, analysts say.
At the heart of the investment is a reported $10 billion refinery and oilcomplex in the strategic Gwadar Port on the Arabian Sea, the ultimatedestination for the massive multi-billion dollar China Pakistan EconomicCorridor, which lies not far from the Indo-Iranian port of Chabahar.
Two Saudi sources have confirmed to AFP that heir apparent to the Gulfkingdom’s throne, Crown Prince Mohammed bin Salman, will visit Islamabadshortly, without giving a date.
And a number of major investment deals are expected to be signed during avisit, officials from both countries have told AFP.
Riyadh and Islamabad, decades-old allies, have been involved for months intalks to hammer out details of the deals in time for the high-profile visit.
“The outcome of the talks so far has been very positive and this is goingto be one of the biggest-ever Saudi investments in Pakistan,” a Pakistanisenior finance ministry official told AFP.
“We hope that an agreement to this effect will be signed during theupcoming visit of the Saudi crown prince to Pakistan,” said the official,requesting anonymity.
The Wall Street Journal reported last month that both Saudi Arabia and theUnited Arab Emirates, Islamabad’s biggest trading partner in the MiddleEast, have offered Pakistani Prime Minister Imran Khan some $30 billion ininvestment and loans.
– Saudi lifeline –
Riyadh investments are expected to provide a lifeline for Pakistan’sslumping economy which was downgraded in early February by S&P ratingagency from a B to a B-, Saudi economist Fadhl al-Bouenain said.
“Saudi investment to Pakistan comes within an economic aid package aimed atrelieving the stress of external debt and a shortage of foreign currency,besides boosting the sluggish economy,” Bouenain told AFP.
The OPEC heavyweight also aims to achieve strategic and commercial goalswith investments in infrastructure and refinery projects, he said.
Saudi Arabia and its Gulf partner, the UAE, have already deposited $3billion each in Pakistan’s central bank to help resolve a balance ofpayments crisis and shore up its declining rupee.
They have also reportedly deferred some $6 billion in oil imports paymentsas Islamabad has so far failed to secure fresh loans from the InternationalMonetary Fund.
Khan has already visited Riyadh twice since taking office in July and inOctober attended a prestigious investment conference widely boycotted byother political and economic figures after the murder of journalist JamalKhashoggi.
Khan also visited Saudi rivals Qatar and Turkey, as well as China seekinginvestments.
“One of the goals for Saudi Arabia expanding investments in refiningworldwide is to secure market share and sustainable exports in the face ofinternational competition,” Bouenain said.
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Saudi Energy Minister Khalid al-Falih visited Gwadar in January andinspected the site for the proposed oil refinery at the deep-sea port, just70 kilometres (45 miles) away from its Iranian competitor, Chabahar.
He was quoted by local media as saying the kingdom was studying plans toconstruct a $10 billion refinery and petrochemicals complex in Gwadar.
– Cutting supply times –
Like most oil suppliers, the world’s top crude exporter has been investingheavily in refinery and petrochemicals projects across the globe to securelong-term buyers of its oil.
A pipeline from Gwadar to China would cut the supply time from the current40 days to just seven, experts say.
Developed as part of China’s Belt and Road Initiative with investmentsworth some $60 billion, Gwadar is being billed as a regional industrial hubof the future, easily accessible for Central Asia, Afghanistan, the MiddleEast and Africa.
“Pakistan needs a rich partner to enter as a third party besides China,capable of injecting needed cash,” Bouenain said.
But so far China has rejected other partners for the corridor that seeks toconnect its western province Xinjiang with Gwadar, including Saudi Arabiaand UAE, said James M. Dorsey, a senior fellow at Singapore’s S. RajaratnamSchool of International Studies.
This is despite calls by Khan “for the Chinese investments to berestructured to include agriculture and job-creation sectors and not onlyin infrastructure”, Dorsey told AFP.
Any Saudi investment in Gwadar will also have geopolitical dimensions,Dorsey said.
Iran late last year inaugurated Chabahar which provides a key supply routeto landlocked Afghanistan and allows India to bypass its historic enemyPakistan.
India has seen Chabahar as a key way both to send supplies to Afghanistanand to step up trade with Central Asia as well as Africa.
But Riyadh is not expected to get involved in any Indo-Pakistani rivalryand the kingdom also has major strategic energy deals with New Delhi, wheredemand for oil is growing fast.
Indeed, in April, the Saudis signed a $44 billion deal to build a hugerefinery and petrochemicals complex in western India. – APP/AFP
