Pakistan is actively seeking substantial investments ranging from $25 to $30 billion from Saudi Arabia, with a focus on copper, minerals, refinery, and solar ventures. To realize these multi-billion-dollar investments successfully, Pakistan must address three primary concerns raised by Riyadh.
The Special Investment Facilitation Council (SIFC), jointly managed by both the military establishment and civilian authorities, has played a pivotal role in eliminating obstacles that impede investment attraction.
First and foremost, Saudi Arabia has expressed a keen interest in establishing a refinery in either Hub or Gwadar, involving an estimated investment of $10 to $12 billion. Discussions on this project have been ongoing since 2019 but have yet to materialize. One major concern voiced by Saudi Arabia revolves around offering incentives through the long-pending Petroleum Investment Policy. This delay primarily stems from the complexities introduced by the 18th Constitutional Amendment, as it involves provincial authorities.
Secondly, the incentives extended thus far have fallen short of the desired level. This shortfall has resulted in delays in progressing with the refinery project. The issues at hand are interconnected with the need to align policies between the central government and the provinces while ensuring smooth repatriation of earned profits and dividends in dollars without interruptions.
Recent negotiations with Saudi Arabia have yielded progress by addressing these concerns, with specific assurances tailored to Saudi Arabia. Both parties are now awaiting a significant milestone to initiate work on the long-anticipated refinery, likely to be situated in Hub, with an expected investment of $10 to $12 billion.
However, a formal commencement date remains pending. Saudi Arabia has also expressed its interest in investing in the Reko Diq project to secure a 10 to 20 percent stake. In this endeavor, Barrick Gold Corporation and Pakistan's state-owned enterprises (SOEs) will each hold 50 percent of the shares, alongside the Balochistan government.
Phase 1 will see a total investment of $4 billion, with Phase 2 involving $3 billion. Production is projected to commence in the fiscal year 2027-28, with the International Finance Corporation (IFC) providing risk insurance for these multi-billion-dollar projects. However, if the Pakistani government chooses to divest its 10 to 20 percent stake, it risks losing control over management.
Islamabad is actively working to persuade Barrick Gold to divest an equivalent portion of its shares to maintain balanced management control in this significant project. Some sources suggest that Barrick Gold is reluctant to part with its shares, posing a challenge for Islamabad in offering its shares to Saudi Arabia.
As for the 600-megawatt solar project, which has piqued Saudi Arabia's interest, the regulatory body NEPRA is yet to determine the tariff. The previously proposed tariff failed to attract investors for this much-needed project. Two options remain: either to present compelling rates for solar-related tariffs or to open it to competitive bidding. The policy decision in this regard will ultimately shape the fate of the 600 MW solar project.