In a significant development, Pakistan has agreed to sell a 15% stake in the multibillion-dollar Reko Diq project to a Saudi investor after Barrick Gold Corporation refused to sell its shares. This decision reduces Pakistan’s overall stake in the project from 50% to 35%. The Balochistan government’s share remains at 25%, while the federal government’s State-Owned Enterprises (SOEs) stakes drop from 25% to 10%, making Pakistan a minority shareholder.
A senior government official noted that Pakistan’s experience with joint ventures in sectors like telecommunications and banking guided this decision, ensuring it would not negatively impact the project’s operations. Existing clauses in the agreement with Barrick Gold prevent unilateral major decisions, giving Pakistan some leverage in urgent matters. This agreement comes amid a declining investment-to-GDP ratio, reaching its lowest in 50 years during the 2023-24 fiscal year. The inclusion of Saudi Arabia is expected to improve the investment climate significantly.
High-level interactions, such as visits by Pakistan’s Chief of Army Staff General Asim Munir to Saudi Arabia and a subsequent visit by a Saudi minister to Pakistan, facilitated these investments. The signing of a Free Trade Agreement (FTA) with the Gulf Cooperation Council (GCC) and a Bilateral Investment Treaty (BIT) were crucial in securing international arbitration rights. Saudi Arabia’s involvement is through the Manara Minerals Investment Company, aiming to invest in global mining assets. Negotiations included a graduated approach for resolving investment disputes, ensuring a streamlined process for investor-state dispute settlements. A formal announcement of the deal is expected soon, marking a pivotal step in enhancing Pakistan’s economic ties with Saudi Arabia and boosting its investment prospects.
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