KSA deal: Pakistan’s stake in Reko Diq project to reduce from 50pc to 35pc

KSA deal: Pakistan’s stake in Reko Diq project to reduce from 50pc to 35pc

May, 26 2024

ISLAMABAD: (Suno News) Pakistan has agreed to sell out its its 15 per cent shares in the multibillion-dollar Reko Diq project to Saudi Arabia after refusal of Barrick Gold Corporation to sell its stake in the project.

After this deal, Pakistan’s overall shares in the Reko-Diq project will be reduced from the existing 50 per cent to 35pc. Out of 35pc, the Balochistan government’s share would remain at the existing 25pc, while the Centre’s State-Owned Enterprises (SOEs) stakes will be reduced from 25pc to 10pc.

With this development, Pakistan will become a minority shareholder in this project, as per official sources.

Pakistan possessed experience in running certain firms in joint ventures with international players; so keeping in view experience in the case of PTCL and the banking sector, it is a conscious decision of the government that the conversion into minority shareholder in Reko Diq project would not become a problem for any practical purpose, the sources said.

There are certain clauses in the existing arrangement of Reko Diq whereby Barrick Gold would be bound not to take any major decision unilaterally, especially related to investments, The News quoted the sources as saying. “Pakistan will be able to invoke such clauses in case of any urgent needs,” they said.

As a result of the Pakistan-Saudia deal, a breakthrough is likely for striking a deal in the Reko Diq with the involvement of Saudi Arabia which would play a critical role for improving investment climate.

Both the countries negotiated finalisation of the term sheet and valuation. The Manara Minerals Investment Company is a new venture between the Saudi Arabian Mining Company (Ma’aden) and the Public Investment Fund (PIF) to invest in mining assets globally and support the development of resilient global supply chains. The Reko Diq Mining Company (RMDC) has been assigned to hire levies and payment mechanisms defined for Balochistan.

Islamabad has negotiated to include a graduated approach for the settlement of investment disputes between the state and investors. Through this arrangement, there will be a mandatory eight-month period to resolve the dispute at the domestic forums. In the case of non-resolution of disputes, it was agreed that recourse could be made to PCA or ICSID as international arbitration forums.