Pakistan offers over $32bn projects for KSA investment

ISLAMABAD: With the commitment to remove all major concerns, Pakistan has pitched 25 projects with estimated desired potential investments of over $32 billion before a high-powered visiting delegation of the Kingdom of Saudi Arabia, including a rail link connecting major mining sites and Gwadar with an investment of $2 billion.

Islamabad also identified the much-awaited Diamer Bhasha Dam with an equity investment of $1.2 billion. Pakistan has also sought an investment for conducting the feasibility of a luxury five-star hotel for which the land is available with the Capital Development Authority (CDA).

The Special Investment Facilitation Council (SIFC), jointly run by the military and civilian sides, on Tuesday made a detailed presentation before the KSA delegation and apprised them about the evolving economic landscape of the country where Islamabad struck an IMF agreement under the Standby Arrangement (SBA) programme, growth in repatriation of profits abroad, expected decline in inflation in next fiscal 2024-25, adoption of market-based exchange rate, improved investment climate in the wake of SIFC initiatives and private sector-led growth with special focus on privatisation, public-private partnership and reduced state footprints.

Terming SIFC as “One Stop Shop” for investors, the delegation was told that this forum was established as a joint political and military initiative to stimulate investment and achieve macroeconomic stability. There are five key sectors, defence, agriculture/ livestock, mines & minerals, IT & Telecom and Energy, for devising long-term investment strategy, reducing bureaucracy, enhancing horizontal/vertical synergy capture and fast-track execution, leveraging Pakistan Army’s expertise, initiatives to realize “low hanging fruit” and curate pipeline of bankable projects.

The KSA concerns have also been resolved or at least some progress has been achieved in four out of six issues through the SIFC. These include the case of Karachi Electric/Aljomaih retention of influence in the Board of Directors, resolution of pending agreements and financial settlements. For Makhdoom Logistics, the removal from the blacklist and return of forfeited $520,000 was achieved as a two-step resolution mechanism proposed to Makhdoom Logistics and their response is awaited. For ACWA Power, the tariff determination for solar power plants had remained pending since 2019, which has now been resolved as the tariff determination has been completed and framework agreement shared. The pending profits cleared up to Q1-FY23 and business as usual is expected by June 24, the dues of Saudi companies are to be cleared on priority after PM issued a directive to SBP.

The delegation was told forex reserves went up from $3 to $8 billion, the exchange rate stabilised, successful completion of the IMF programme, international arbitration/dispute resolution via the Bilateral Investment Treaty with KSA (ratification awaited) and Investment Ombudsman for prompt dispute resolution.

The SIFC identified potential projects for seeking KSA investment, including the outsourcing of Islamabad, Lahore and Karachi airports, Roosevelt Hotel Corp and the divestment of Pakistan International Airlines. It also included an Industrial Feedlot Fattening Farm in Punjab with an investment of $25.4 million under which it will rear 30,000 feedlot animals with an annual production of six thousand tons of meat. There is a 50,000-acre lease available for corporate farming of wheat, canola, millet and cotton on a large scale on a culturable wasteland in Cholistan.

For Saudi-Pakistan semiconductor development, chip packaging (OSAT) and a chip development centre, the potential investment of $270 million for Project 1: $20m for training of human resources, Project 2: $50m to establish chip packaging/OSAT to work with ALAT, Project 3: $200m to establish Saudi-Pakistan Microelectronics Centre (SPMC) to develop strategic chips.

For investing in smart device manufacturing in Pakistan for local and international markets, there is a potential investment of $100 million for smart device manufacturing units, capacity of 6 million units per annum. There is the possibility of less than $114/month skilled human capital for mobile manufacturing vs $700-$1,000 in China, zero regulatory duty, zero fixed income tax, and withholding tax exemption.

For the copper and gold mine in the development stage with a projected output of 80m tonnes per annum, SOE shares are to be offered to KSA strategic investors. For Multi-Asset Exploration Leases in the Tethyan Metallogenic Belt adjacent to Reko Diq with proven significant copper- gold deposits, there is a potential of $50 to $60 million investment for two years adjacent to proven gold and copper reserves of Reko Diq.

For strategic rail link development connecting major mining sites and Gwadar, there is a potential investment of $2 billion. For Greenfield Mine Development with a processing facility of 2.5 million tonnes/year capacity, District Khuzdar, Balochistan, there is a potential investment of $154 million for high-quality concentrates of Barite (BaSO4), Lead (Pb) and Zinc (Zn) with an over 30-year life. It will be the third major mining project after Reko Diq and Thar Coal with bankable feasibility.

For the Integrated Iron Ore Mining and Steel Mills Complex at Chiniot, Punjab, there is a potential investment of $1.3 to $1.5 billion, including $160m for mining, $200m for processing of Iron Ore and $950m for steel mills. For 600 MW solar park, Kot Addu, the project cost is estimated at $300 million with a debt and equity ratio of 75/25 percent as the project is to be developed on an IPP basis, 25-year BOOT agreement.

The SIFC has also identified 500 kV Transmission Line Project (Matiari-Moro-RY Khan) with a cost of $676 million, 500 kV Ghazi Barotha-Faisalabad Transmission Line generating 12-14pc USD IRR with a cost of $350 million, 2000 MVAR Reactive Compensation Devices at 5 NTDC grid stations with the cost of $426 million, 1,000 MWh Power Storage System at Jhimpir with the cost of $300 million and 1,320 MW Thar Coal Based Power Project, readily available infrastructure and power evacuation facilities on cost plus tariff with a cost of $1.3 billion.

The KSA has also been offered over 9,000 MW Diamer Bhasha Hydropower Project. The SIFC informed the KSA delegation that there will be competitive returns (US 10-year bond), secured revenue stream through tariff (caters for ROE and Debt Service Obligations), 100% sale of power guaranteed, immediate returns without CoD Investment. The project cost is estimated at $2,307 billion (approx $8 bn) and foreign financing needs will be standing at $3.5 bn. The Equity Investment of $1.2 bn from KSA Investment, debt requirement is US$2.3bn (Corporate Debt through SFD, IsDB, Arab Co-ord Group).

For the Greenfield refinery project, a Greenfield Petroleum Refinery of 300-350K bpd planned in Gwadar/Hub with an investment of $10 billion with guaranteed offtake, 20 years tax holiday, 2x Guaranteed KSA crude offtake and margin protection and 100% guaranteed dividend repatriation. For Brownfield Refinery Expansion and Upgrade, an investment of $1.7 billion for expansion from the current 50,000 bpd to 100,000 bpd and upgrading to deep conversion refinery.

It has also pitched an integrated multi-use tourism zone with the potential to become the highest resort city in Asia, there is a potential investment of $21 million for the development of an Integrated Tourism Zone at Thandiani, KP on 58 acres, complete tourism solution including a Retail Village, Food Village, etc, development of Integrated Tourism Zone at Ganool, Swat Valley, KP, on 59.6 acres with an investment of $20.5 million, and development of a flagship 5-star hotel with proposed equity participation by KSA. There are 4.51 acres of land available. There is a potential investment of $36.57 million/$213,000 per room. For the Soda Ash Plant with a capacity of 300,000 MT per year, it is proposed to establish a Soda Ash Plant with a capacity of 300,000 metric tons/year involving an investment of $175 million.

The petroleum authorities have offered the visiting Saudi delegation the upgradation of Pakistan Refinery Limited (PRL), Petrochemical Complex, Machhikay-Taru Jabba white oil pipeline, while the Power Division has offered its project of Thar-Matiria-Rahim Yar Khan electricity transmission line. The Saudi delegation, however, responded to the projects of upgrading PRL, the petrochemical complex, saying they would ask Saudi Aramco to initiate dialogue with Pakistan authorities to know how feasible and viable these projects are. The Saudi government would facilitate the talks on the said projects. The First Women Bank has also been offered to Saudi Arabia.

Prime Minister Shehbaz Sharif may soon visit Riyadh after the talks on the said projects get mature and MoUs signed.

In a related development, Prince Faisal bin Farhan Al Saud, accompanied by a delegation, met Chief of Army Staff General Syed Asim Munir. The discussions centred on mutual interests and policies to further bolster bilateral cooperation across various sectors, the Inter-Services Public Relations (ISPR) in a statement said. The Saudi FM underscored the enduring and strategic nature of the relationship between the two nations, emphasising on exploring multiple avenues for continued reinforcement of bilateral ties. In response, the COAS conveyed appreciation for the delegation’s visit, affirming the traditional bond of fraternity between Pakistan and the Kingdom of Saudi Arabia. He underscored the reverence and affection that the people of Pakistan hold for their Saudi brethren.

Pakistan and the Kingdom of Saudi Arabia reiterated their resolve to build a strong partnership and further promote economic cooperation for the mutual benefit of the two brotherly countries. This was discussed during a meeting between President Asif Ali Zardari and Saudi Foreign Minister Prince Faisal bin Farhan Al Saud, who called on him at the Aiwan-i-Sadr. The Saudi foreign minister was accompanied by a high-powered delegation. Chairman of the Pakistan Peoples Party Bilawal Bhutto Zardari, Minister for Foreign Affairs Ishaq Dar, Minister for Privatisation and Board of Investment Abdul Aleem Khan, Minister of Petroleum and Water Resources Musadik Masood Malik, Minister of Industries and Production Rana Tanveer Hussain, and Foreign Secretary Syrus Sajjad Qazi and senior government officials also attended the meeting.

The two sides discussed the regional dynamics and recent developments in the Middle East and called for an immediate and unconditional ceasefire and an end to the Israeli atrocities in Gaza. Both sides also exchanged views on issues of bilateral importance and the challenges being faced by the Ummah.

In his meeting with Prime Minister Muhammad Shehbaz Sharif, the Saudi foreign minister conveyed the Kingdom’s commitment to an enhanced strategic and economic partnership with Pakistan.

The prime minister underscored the significance accorded by Pakistan to its longstanding fraternal, economic and strategic relations with Saudi Arabia. He said both countries had always stood together at all times, a statement issued by the PM media wing said.

In this regard, the prime minister said that both sides needed to work closely to expedite the first phase of Saudi investments in Pakistan under the new arrangement. The prime minister informed the delegation about the Special Investment Facilitation Council and its initiatives to promote investment in Pakistan. He also highlighted the key role of Chief of the Army Staff General Syed Asim Munir and the cooperation of all institutions for the promotion of investment in the country through SIFC. The two leaders also discussed the escalating situation in the occupied Palestinian Territories.

The Saudi FM and FM Ishaq Dar held comprehensive talks to lend a positive impetus to bilateral cooperation and developing an enduring and mutually rewarding economic partnership. The Foreign Office in its statement said the two sides finalised a bilateral implementation mechanism to closely coordinate and execute investment-related matters at the functional level to turn sovereign commitments into tangible economic outcomes.

Prince Farhan said he was extremely impressed by the proactive attitude of the Pakistani government. The Saudi side expressed interest in improving investment in the ecosystem in Pakistan and appreciated SIFC’s role in the amicable resolution of KSA’s legacy investment/business-related issues.

Later, addressing a joint media stakeout, Prince Farhan said he had held a series of productive meetings, including with the prime minister and president, in which he stressed the importance of the commitment of Saudi Arabia to further explore avenues in Pakistan. “I feel confident our two teams will focus on overcoming the hurdles, accelerate the process, as we saw significant opportunities on the table. This lays the groundwork for next few months, as there are a lot of untapped potential,” he said. He was grateful for the hard work from Pakistan’s side.

He pointed to his meeting at the Special Investment Facilitation Council (SIFC), saying the Council was strongly business-focused on addressing challenges and opportunities and highlighting the work they can do together.

“I feel very confident the results of this visit and the results of work being done between the two respective teams with this attitude, with this approach of focus on results and overcoming hurdles will deliver significant benefits for both of our countries, will significantly accelerate process of achieving those investments that we’re looking at together. I can say there is significant opportunity to increase the level of investment that is already on the table,” Prince Farhan said.

Dar also welcomed the outcome of the meetings saying, “We have given them a big menu which they will take home and discuss, as we aim to take this relationship into a Strategic Economic Partnership”. He said since the Kingdom was reaching out for a new world by 2030, Pakistan has requested to consider a new policy in which Pakistanis can be trained in special skills in different fields.

To a query on the genocide in Gaza, the Saudi foreign minister lashed out at the international community for not doing enough to bring a ceasefire in Gaza. “Efforts of the international community for a ceasefire are insufficient. Famine and starvation to death are unacceptable, and there is no justification for this. With over 33,000 lives lost and restrictions on aid delivery, the plight of Gaza is intolerable. We must have a ceasefire now. Now we see some efforts after six Western aid workers were killed. These are double standards,” he said.

Pointing to the region, he said, “We are in an unstable region and do not need more conflict. De-escalation is needed, as differences can be solved through dialogue. We will push (for this).”

Dar said he agreed with his counterpart and said both sides have called for a ceasefire in Gaza which should be immediate and non-conditional with those guilty of crimes held accountable. “Only killing of six Western aid workers woke them up,” he remarked.