ISLAMABAD: Chief Justice of Pakistan (CJP) Umar Ata Bandial has a word of advice for the government: come up with a clear policy in over a month and form a body like the China-Pakistan Economic Corridor (CPEC) Authority to sustain fresh concessions granted for copper and gold mining in the Reko Diq town of Balochistan.
“You should announce this as a policy, not meant for the Reko Diq project only but for all investors so that it is understood across the board and helps encourage the entire class of businesses and industrialists to invest in Pakistan,” the CJP observed during a hearing on Thursday while pointing towards government’s law officer, Additional Attorney General (AAG) Chaudhry Aamir Rehman.
CJP Bandial is heading a five-judge Supreme Court bench formed in October to hear a presidential reference on the reconstitution of the Reko Diq deal.
He said such a policy would ensure transparency and help the apex court if it is done before Dec 16 — the cut-off date after which Pakistan may attract another $2-3 billion penalty by the International Chamber of Commerce on top of a $6.4bn fine slapped in 2019 by World Bank’s arbitration court ICSID.
The CJP stressed that when the government was looking for justification for the relief it was granting to the investor for not only offering mining opportunity but also settling the huge liability in the shape of an international award, Supreme Court’s judges were not financial experts and could only analyse the agreement on its legal aspects.
He suggested that the federal government should set up an authority like the CPEC Authority to ensure the new contract on Reko Diq was performed honestly, especially when Pakistan also had an obligation of $4.5bn as equity in the project and the Balochistan government did not have a strong institution in this regard.
“We don’t want to see the Reko Diq venture collapse, and the foreign investor also wanted to see its investment protected,” CJP emphasised.
Justice Ijazul Ahsan, another member of the bench, insisted that setting up such an authority would also help make the entire process more transparent for those who wanted to invest in Pakistan and recalled how a former prime minister had once stated that he was willing to sell the Pakistan Steel Mills (PSM) even for Re1 since it had liabilities of over Rs100bn.
Justice Ahsan also referred to the policy of parking an entity’s debt to another head and then offering it for privatisation.
AAG Rehman replied that there was a realisation (among the government’s circles to develop a policy in this regard) but feared that it might not be possible to announce such a policy before Dec 16.
“We will also have to realise that if we do not relax the requirements, we may lose such a large investment opportunity and may imperil the development of the economy against the national interest,” he told the court.
CJP Bandial emphasised that the terms arrived at with the proposed settlement agreement must ensure that it was transparent and for the public good and these were relaxed only to facilitate the process by not lowering the threshold of necessary requirements.
The AAG said that there was a very limited market in the world to sell such a huge project like Reko Diq and recalled how the Balochistan government had once offered a Chinese firm to come forward and even issued an EoI.
However, that company offered just $1bn and sought 75 per cent equity with the condition that Pakistan itself settle the huge liability.
During the hearing, Justice Yahya Afridi wondered whether a provincial government could enter into an international contract with a foreign investor. The AAG explained that it was a tripartite agreement between the federal and Balochistan governments and Barrick Gold. “We have struck the best possible deal,” he said.
Published in Dawn, November 11th, 2022