Monday, November 30th, 2020
Home »Stocks and Bonds » Pakistan » No Saudi grants but investments

Saudi Arabia has no plans to extend a bailout package of $ 10-12 billion or oil facility on deferred payment to Pakistan as is being speculated in the media. "No such package is under consideration with the visiting delegation as these are operational people while decisions to extend assistance or give oil on deferred payment are taken at the very highest level," official sources told Business Recorder.

The visiting Saudi delegation met Advisor to Prime Minister on Commerce, Textile, Investment, Industries and Production Abdul Razak Dawood and Federal Ministers and discussed ways and means to boost bilateral trade and investment avenues in different fields.

The delegation comprises Ahmad Hamed Al-Ghamdi, Advisor & Ministry of Energy, Industry & Mineral Resources (MEIM's) Vision Realization Office (HoD), Zerea Qaranbaish, Director of Strategic Partnership & Business Development (Asia Countries), Ibrahim Amin Ahmad, Marketing Manager Refining & Marketing Business Development International Operations (Saudi Aramco), Shaaf Al- Osaymi, Director Corporate Affairs (Maaden Company), Ayad Al-Amri, Business Development Director( ACWA Power Company) and Adbul Aziz Bin Sanad, and Trade Facilitation Manager (Saudi Export Development Authority).

The delegation will visit Gwadar and then will hold meetings with the officials of Petroleum Division and Power Division for proposed investment in an oil refinery and in power plants. The delegation is also expected to visit RLNG-fired power plant at Heveli Bahadar Shah.

"The delegation will visit Gwadar and Reko Diq on Tuesday (today) and when they return they will hold meetings with the Petroleum Division after which we expect to sign some agreements," sources added.

Sources revealed that the Trading Corporation of Pakistan (TCP) has floated a tender for import of 100,000 tons of urea and Saudis are expected to participate. In previous years' Saudi Arabia had supplied urea to Pakistan through Saudi Arabian Basic Industries Corporation (SABIC).

"Our meeting with the Saudi delegation was in a very friendly atmosphere. They are clearly ready to invest in Pakistan but as yet the amount of investment they have in mind has not been firmed up," the sources continued.

Another official said that the visiting delegation would spearhead future top level visits but added that the Saudis have indicated they will invest in projects but not give any grants or a bailout package as is being envisaged in the media.

According to a press release, Advisor on Commerce, Textile, Industries, Production and Investment Abdul Razak Dawood, welcomed the Saudi delegation led by Ahmed Hamed Al-Ghamdi, Advisor to Saudi Minister for Energy during the meeting.

Dawood informed the delegation about the liberal invest regime of the country and available opportunities for the KSA. The Saudi delegation comprised high level officials of various government departments as well as representatives of Saudi Aramco, Maaden and ACWA power.

The Saudi team will hold technical discussions with their counterparts in Government of Pakistan with a view to finalizing the investments in mega projects in Pakistan.

The Federal Minister apprised the delegation on the huge potential of investment lying unrealized in the areas of Power generation, transmission and distribution.

He apprised the delegation in detail on the projected increase in the Power consumption keeping in view the GDP growth especially after operationalization of CPEC. The representative of ACWA in the Saudi delegation offered their institutional capacity especially in the power generation areas and offered to engage with Pakistan in long-term projects aimed at ensuring the economic and sustained power supplies.

He further added that they are interested in the areas of renewable energy and establishing water desalination plants. Besides, trade and investment relations between the two brotherly Islamic countries need to be enhanced in tandem with their long established and time-tested ties. For this, both sides agreed to work harder and pave way for a broad partnership to maximally exploit the opportunities arising in the region.

He said that Government of Pakistan has made necessary preparations so as to make the stay of Saudi delegation productive in Pakistan. He also thanked the Saudi delegation for arranging the delegation to Pakistan within the shortest possible period after the meeting of Prime Minister of Pakistan with His Majesty the King of Saudi Arabia held about two weeks back.

Head of the Saudi delegation thanked the Government of Pakistan for their hospitality and cooperation in paving way for enhanced bilateral cooperation in the field of trade and investment. He showed his intentions to finalize the framework for flow of investment to Pakistan from Saudi Arabia in mega projects.

Pakistan and Saudi delegation are likely to sign an MoU to invest in the Reko Diq gold and copper mines and bid for the proposed privatization of two Liquefied Natural Gas (LNG) power plants, sources said.

During the visit of Prime Minister Imran Khan to Saudi Arabia "three agreements" were reportedly signed envisaging significant Saudi investment in the country subsequent to an invitation by Pakistan to Saudi Arabia to become the third partner in the China-Pakistan Economic Corridor (CPEC).

The two countries have already discussed the following agenda: (i) enhancement of bilateral trade, market access and investment through bilateral trade and investment agreements including an Early Harvest Programme; (ii) facilitation for business visa and rationalization of business visa fee; (iii) removal of trade barriers; (iv) trade promotion activities; (v) investment in Pakistan; (vi) establishment of Pakistani Private Sector Trade Center in Riyadh; (vii) re-activation of Saudi-Pakistani Business Council; and (viii) MoU on co-operation in exchanging information and removing valuation discrepancies between the customs authorities of the two countries.

Saudi Arabia was reportedly deeply concerned when Indian Prime Minister Narendra Modi visited Iran in February 2018 during which the two countries signed a number of agreements of geopolitical implications including the one through which India is getting the operational control of Chabahar Port for 18 months.

The Iranian Chabahar Port, located on the southeast of the Gulf of Oman is widely considered as a competitor to Pakistan's Gwadar Port irrespective of both Pakistani and Iranian officials attempting to dispel the impression by declaring Chabahar and Gwadar as complementary ports.

A senior Pakistani government official, while talking to Business Recorder on condition of anonymity, maintained that the proposed Saudi investment in Gwadar port has nothing to do with Saudi-Iran rivalry, adding that Tehran has not officially shared any concerns with Islamabad on the latest development.

"Pakistan's strategic relations with Saudi Arabia are not at the cost of its relations with Iran," he added.

Clarifying further, he said: "Any investment by Saudi Arabia in Gwadar Port should not be seen as against any other country in the region".

Senior analyst Lieutenant-General Talat Masood (retd) told Business Recorder that Saudi investment in Gwadar Port can been seen from many angles and Iran's factor can not be ruled out. "Both Saudi Arabia and Iran try to counter each other, but I don't think they would use their relationship with Pakistan as a tool to counter each other's interest in the region," he said.

He further stated that "one can also presume that Saudi Arabia may have the blessings of the United States for its plans to invest in Gwadar port, but on the other hand US is enjoying close strategic partnership with India.

"So, there are various presumptions, but to my opinion the Saudis are considering Gwadar Port as an economic opportunity which the Kingdom wants to avail. Saudis haven given much to Pakistan and now they think they should also get something in return from Pakistan," he added.

Sources in the Finance and Petroleum Ministry stated that MOUs are being finalized for possibility of their signing on Wednesday. They added that a senior Saudi official is also expected to visit Pakistan in the next two days to witness the signing of MoUs. However, officials in petroleum and finance ministry were not ready to confirm that Pakistan formally requested for oil on deferred payment for 90 days.

Copyright Business Recorder, 2018

the author