ISLAMABAD – According to analysts, Saudi Arabia is preparing a recordinvestment package for Pakistan and will likely provide relief for itscash-strapped ally, while also addressing the regional geopoliticalchallenges.
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 (CPEC).
According to a news agency, the Crown Prince Mohammed bin Salman will visitIslamabad shortly. A number of major investment deals are expected to besigned during the visit, officials from both countries have told.
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.
“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 Prime Minister Imran Khan nearly $30 billion ininvestment and loans.
Riyadh’s investments are expected to provide a lifeline for Pakistan’sslumping economy, which was downgraded in early February by S&P ratingsagency from a B to a B-.
“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,” Saudi economist Fadhl al-Bouenainsaid.
The OPEC heavyweight also aims to achieve strategic and commercial goalswith investments in infrastructure and refinery projects, he said.
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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 about $6 billion in oil imports paymentsas Islamabad has so far failed to secure fresh loans from the InternationalMonetary Fund. Imran Khan has already visited Riyadh twice since takingoffice in August and attended a prestigious investment conference inOctober. Imran Khan also visited Qatar and Turkey, as well as China,seeking investments.
“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.
Saudi Energy Minister Khalid al-Falih visited Gwadar in January andinspected the site for the proposed oil refinery at the deep sea port. Hewas quoted by local media as saying the kingdom was studying plans toconstruct a $10 billion refinery and petrochemicals complex in Gwadar.
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 thesupply time from the current 40 days to just seven, experts say.
Developed as part of China’s Belt and Road Initiative with investmentsworth nearly $60 billion, Gwadar is being billed as a regional industrialhub of the future, easily accessible for Central Asia, Afghanistan, theMiddle East and Africa.
“Pakistan needs a rich partner to enter as a third party besides China,capable of injecting needed cash,” Bouenain said. – APP/AFP
