ISLAMABAD: Pakistan is expecting $21 billion worth of seven memorandums of understanding (MoUs) signed with Saudi Arabia to come to fruition in three phases over the next six years.
The two sides have set up two major follow-up forums to ensure timely completion of feasibility studies and project implementation including the top level Saudi-Pakistan Joint Supreme Coordination Council (SPJSCC) and a Joint Working Group (JWG).
The SPSCC will be led by Prime Minister Imran Khan and Saudi Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud while joint working group on energy would be led by Saudi Minister for Energy and Industry Khalid Al Falih and Petroleum Minister Ghulam Sarwar Khan.
Officials involved in two-day bilateral engagements said three initiatives of $7bn are expected to be completed in the first phase of 1-2 years (short-term). These include about $4bn Saudi investment in two regasified-liquefied natural gas (RLNG) based power plants in Punjab. The sale of two projects was, however, expected to go through the open bidding process even though the previous government had parked a major part of $1.5bn ‘Saudi gift’ in the Pakistan Development Fund to finance the two power plants.
Joint Working Groups formed; high-level coordination council to monitor progress
Another $2bn investment is expected from ACWA Power within two years, mostly in renewable energy projects in the coastal areas of Balochistan and Chaghi wind corridor, based on feasibility studies to be conducted in the near future, officials said.
ACWA Power is a Riyadh-based developer, investor, co-owner and operator of a portfolio of power generation and desalinated water production plants in 10 countries including in the Middle East and North Africa, Southern Africa and South East Asia regions.
In addition, a $1bn investment from Saudi Fund for Pakistan is also expected in first two years as participation in projects like Diamer-Bhasha and Mohmand dams, Jamshoro and Jagran power projects.
The mid-term investment up to $2bn is anticipated in 2-3 years. These include smaller petrochemical projects and food and agriculture projects of $1bn each.
The long term (4-6 year) Saudi investment worth $12bn is expected in two major projects. These include $10bn oil refinery to be set up by Aramco and $2bn investment in Mineral Development.
The feasibility study for oil refinery and identification of mineral projects are yet to be made, officials explained, adding that the formal agreements on all these projects would be signed on a fast-track basis as soon as their feasibility studies are completed.
The two sides decided to set up the SPJSCC at the highest level to enhance bilateral economic and business relations in various fields in an institutionalized manner and resolve any hiccups at the very outset. The meetings of the council will be held in the two countries on an alternative basis.
The two sides agreed to make use of all available channels to promote bilateral trade, investment and promote communication between the two peoples and businessmen. The Joint Commission on Commerce and Trade, which is now part of the SPJSCC shall facilitate bilateral trade in specific sectors and products.
The two sides agreed to further strengthen measures to promote trade, participate in exhibitions and events, welcome business meetings from both countries, and encourage the private sector to take the lead in building a strong economic partnership between the two brotherly countries.
The two sides expected the total investment opportunities worth $20bn would increase the mutual investment and volume of bilateral trade.
A joint statement quoted Saudi side as expressing its appreciation for the initiatives taken to improve the conduct of business and facilitate foreign direct investment, and hoped the potential of the China-Pakistan Economic Corridor (CPEC) will contribute to the development and prosperity of the region.
In follow-up to the signing of MoUs, both sides agreed to have expeditious exchange of information to carry out feasibility studies and discussed other areas of cooperation including supply of petroleum products and LNG on a deferred payment basis.
Mr Falih said his country would look into some other mutually beneficial investment opportunities in energy sector of Pakistan.
Separately, a Pak-Saudi Investors Conference on the sidelines agreed to promote bilateral trade to its true potential as its existing size of $3.7bn was fall below the strength of brotherly relationship. Adviser to Prime Minister on Commerce, Textile and Industry Abdul Razzak Dawood and Saudi Commerce Minister Majid Bin Abdullah Al Qasabi co-chaired the conference.
Dawood said there were many untapped potential areas which should be explored for mutual benefit and take advantage of trade and investment opportunities like in agricultural, natural resources and human resource in Pakistan and logistic, mining and religious tourism in Saudi Arabia. He assured the guests that Pakistan would facilitate and provide a level playing field to Saudi investors.
He said Pakistan’s economy was heading in the right direction but was facing energy shortage, when China came forward and decided to initiate investment in different energy generation projects under CPEC. He said the government was working on renewable energy policy to improve energy mix with alternate energy from existing 4pc to 30pc by 2025 to shift away from expensive oil and gas.
A statement quoted Mr Dawood as saying that Saudi investors and businessmen showed keen interest to invest in petroleum and energy generation sectors as the huge scope of investment were existing with lucrative rate of returns.
Saudi Minister for Commerce Majid Bin Abdullah Al Qasabi said Pakistan was a nation of passion and dedication, and the compass of bilateral relations was moving towards new direction.
Terming the current trade volume of $3.7 billion between the two countries as low, the Saudi minister said that this volume was very moderate and it should be enhanced by exploiting new areas of trade and development in the country. He hoped the current visit would help ease the bureaucratic challenges on both sides.
Published in Dawn, February 19th, 2019