KARACHI: Two state-owned energy companies listed on the Pakistan Stock Exchange said on Monday that they have negotiated and finalised, along with Government Holdings Pakistan Ltd, the definitive agreements for their respective participation in the reconstituted Reko Diq project.

Oil and Gas Development Company Ltd, Pakistan Petroleum Ltd and Government Holdings Ltd, another state-owned entity, will each invest in an associated company for the acquisition of 8.33 per cent interest in the project and subsequent capital investments going forward.

The reconstituted project, which will excavate gold and copper reserves in Balochistan, has saved Pakistan from an $11 billion penalty in the Reko Diq case.

Earlier in March, the federal and Balochistan governments reached an agreement with two international firms — Antofagasta PLC and Barrick Gold Corporation — on a framework to reconstitute the Reko Diq project that allowed Antofagasta to make an exit.

Under the new agreement, Barrick Gold Corporation will get a share of 50pc and the Balochistan government will hold a 25pc stake in the project. The rest of the 25pc shareholding will be controlled equally (8.33pc) by the three state-owned enterprises.

The original agreement signed in 2006 set aside a share of 37.5pc to Barrick Gold and Antofagasta each while the Balochistan government received a 25pc stake. But the agreement was suspended in 2011 over a dispute on the legality of the licensing process.

As a result, the International Court of Arbitration levelled a $6.4bn award on the government of Pakistan while the London Court of Arbitration imposed another $4bn fine.

Published in Dawn, November 1st, 2022