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 investmentssuccessfully, Pakistan must address three primary concerns raised byRiyadh.
The Special Investment Facilitation Council (SIFC), jointly managed byboth the military establishment and civilian authorities, has played apivotal role in eliminating obstacles that impede investment attraction.
First and foremost, Saudi Arabia has expressed a keen interest inestablishing a refinery in either Hub or Gwadar, involving an estimatedinvestment of $10 to $12 billion. Discussions on this project have beenongoing since 2019 but have yet to materialize. One major concern voiced bySaudi Arabia revolves around offering incentives through the long-pendingPetroleum Investment Policy. This delay primarily stems from thecomplexities introduced by the 18th Constitutional Amendment, as itinvolves provincial authorities.
Secondly, the incentives extended thus far have fallen short of thedesired level. This shortfall has resulted in delays in progressing withthe refinery project. The issues at hand are interconnected with the needto align policies between the central government and the provinces whileensuring smooth repatriation of earned profits and dividends in dollarswithout interruptions.
Recent negotiations with Saudi Arabia have yielded progress by addressingthese concerns, with specific assurances tailored to Saudi Arabia. Bothparties are now awaiting a significant milestone to initiate work on thelong-anticipated refinery, likely to be situated in Hub, with an expectedinvestment of $10 to $12 billion.
However, a formal commencement date remains pending. Saudi Arabia has alsoexpressed its interest in investing in the Reko Diq project to secure a 10to 20 percent stake. In this endeavor, Barrick Gold Corporation andPakistan’s state-owned enterprises (SOEs) will each hold 50 percent of theshares, alongside the Balochistan government.
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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 insurancefor these multi-billion-dollar projects. However, if the Pakistanigovernment chooses to divest its 10 to 20 percent stake, it risks losingcontrol over management.
Islamabad is actively working to persuade Barrick Gold to divest anequivalent portion of its shares to maintain balanced management control inthis significant project. Some sources suggest that Barrick Gold isreluctant to part with its shares, posing a challenge for Islamabad inoffering its shares to Saudi Arabia.
As for the 600-megawatt solar project, which has piqued Saudi Arabia’sinterest, the regulatory body NEPRA is yet to determine the tariff. Thepreviously proposed tariff failed to attract investors for this much-neededproject. Two options remain: either to present compelling rates forsolar-related tariffs or to open it to competitive bidding. The policydecision in this regard will ultimately shape the fate of the 600 MW solarproject.
