Saudi Arabia has assured Pakistan that it will show substantial progress on $21 billion investment commitments before the next meeting of Pak-Saudi Supreme Coordination Council, sources in Petroleum Division told Business Recorder. The Pak-Saudi Supreme Coordination Council was established this year for promotion of political, economic and cultural cooperation between the two countries. Prime Minister Imran Khan and Saudi Crown Prince Mohammed Bin Salman jointly presided over the inaugural session of the council during the visit of the crown prince in February 2019.
There is a resolve to show tangible results before the meeting of the Supreme Coordination Council which is likely to meet in the first quarter of next year and the Kingdom wants to use this period to push pledges forward, sources in Petroleum Division said. An assurance to meet investment pledges was given by a delegation of Saudi Arabia which arrived in Islamabad on September 7. Both sides reviewed ongoing bilateral trade and investment developments at the time.
During the two-day visit of Prime Minister Imran Khan to Saudi Arabia on September 19, the Pakistani officials discussed the Saudi's investment commitments in Pakistan, sources said. Sources maintained that Saudi Arabia Deputy Minister of Energy Khalid Saleh Al-Modaifer conveyed to Petroleum Division that the proposed mega projects are complex and require time and feasibility studies but added that the Saudi leadership wants to accelerate work on them.
To speed up the proposed investment on setting up an oil refinery at Gwadar and petrochemical sector, officials of Petroleum Division are regularly meeting with Saudi Ambassador Nawaf bin Said Al-Malki, sources said. The refinery complex is envisaged as a very large project with an entire value chain that will require numerous studies. However, it is expected that the technical study will be done by end of this year.
Saudi Arabia and Pakistan signed seven memoranda of agreement for projects worth $21 billion during the official visit of Saudi Crown Prince Muhammad Bin Salman to Islamabad. According to Pakistan government figures, short-term projects in the pipeline include two Re-Gasified Liquefied Natural Gas plants for $4 billion, a $2 billion investment by Saudi power producing company ACWA Power in Pakistan's renewable energy sector and a $1 billion Saudi Fund for Pakistan.
Mid-term projects include $1 billion each for petrochemical and food and agricultural projects. The long-term investments are $10 billion for the construction of the multi-billion-dollar Saudi Aramco oil refinery in Gwadar and $2 billion for the minerals sector.
Net Foreign Direct Investment (FDI) from Saudi Arabia stood at $3.1 million during July-August financial year 2019-20, according to State Bank of Pakistan (SBP). Analysts expect that because of the Aramco refinery and the petrochemical complex, Pakistan will be able to save around $2 billion annually on import of crude and the making of byproducts.
Pakistan meets about 80 percent of its energy requirements through imports. Its energy demand has also been increasing by 8 percent a year while its oil imports constitute nearly a quarter of its total import bill, according to the Pakistan Bureau of Statistics (PBS). Saudi Arabia has already given $3 billion in cash assistance besides providing $3.2 billion oil facility on deferred payments to Pakistan. Saudi Arabia plans to set up a $10 to $12 billion oil refinery in Pakistan's deep-sea port of Gwadar.