Business

Pakistan, Saudi Arabia expected to make progress on Reko Diq deal

Published

4 months ago

Farwa

Progress on deal expected during 3-day mineral forum in Riyadh.
Energy minister leads high-level Pakistani delegation.
Delegation likely to discuss KSA’s interest in building refinery.

ISLAMABAD: Talks with Saudi Arabia on a potential investment deal in the Reko Diq copper and gold project are expected to progress during a three-day mineral forum that began today in Riyadh, The News reported citing an energy ministry official on Tuesday.

A high-level Pakistani delegation led by caretaker Energy Minister Muhammad Ali is attending the Future Minerals Forum (FMF), a platform to promote mineral value chains in Africa, Western and Central Asia, which will be held from January 9 to 11 in Riyadh.

The secretary of the petroleum division and officials from the Special Investment Facilitation Council (SIFC), Pakistan Mineral Development Corporation (PMDC), Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Geological Survey of Pakistan (GSP) will also be part of the delegation.

The delegation is also likely to discuss Saudi Arabia’s interest in building a refinery in Pakistan, the official said.

“Pakistan authorities may also take up this issue of paramount importance with Aramco officials during the visit.” Aramco wants the participation of Sinopec — a Chinese company in the refinery project and Pakistan has agreed to it.

Saudi Arabia is seeking to attract SR63.7 billion ($170 billion) worth of investment in the mining industry by 2030 to help the country capitalise on its wealth of mineral resources, the total value of which is estimated to exceed SR4.88 trillion ($1.3 trillion), an official said.

In 2022, the Geological Survey of Pakistan (GSP) and Ma’aden, a Saudi-owned mining company, developed an understanding for a survey to locate the treasures of the minerals.

Apart from attending the Forum, the official said, the relevant authorities of Saudi Arabia and Pakistan during the visit will also deliberate on the possible investment in the Reko Diq project and both countries may strike a deal to this effect.

In addition, the visiting authorities are also likely to take up with Saudi Arabia its interest in installing a state-of-the-art deep conversion refinery in Pakistan. The SIFC is highly keen to sell government shares to Saudi investors to enhance the footprints of Saudi investment in Pakistan.

The investment that is to be made by Saudi investors (KSA) will be treated as a strategic investment, one official stated to The News, while quoting SIFC’s top official.

Under the revised agreement, 50% of shares are held by the Canadian company Barrick Gold Corporation whereas Antofagasta of Chile has exited the project in return for $900 million deposited by three entities of the federal government — OGDCL, PPL and Government Holdings Private Limited.

These entities hold a 25% share in the project whereas the same number of shares are owned by Balochistan. Of them, 15% are on a fully-funded basis and 10% on a free carried basis.

The Energy Minister Ali and top officials of the power division have played a pivotal role in the directives of SIFC to make an agreement of the government of Pakistan with K Electric and resolve all its issues to facilitate its main owner which is Aljomaih Power Limited Company of Saudi Arabia.

It was one of the conditions from the Kingdom that Pakistan should first facilitate Aljomaih Power Limited of Saudi Arabia by resolving all issues of KE for more investment in Pakistan in mining, refinery, agriculture and other sectors.

The majority shares — 66.4% — of the company are listed in the PSX owned by KES Power, a consortium of investors including Aljomaih Power Limited of Saudi Arabia, National Industries Group (Holding), Kuwait, and the Infrastructure and Growth Capital Fund (IGCF).

Business

Pakistan’s $1.1 billion loan tranche is approved by the IMF board.

Published

2 days ago

Farwa

The cash is the third and last installment of a $3 billion standby agreement with the international lender that it obtained to prevent a sovereign default last year and that expires this month.

Following the discussion of Pakistan’s request for the release of funds at today’s IMF Executive Board meeting in Washington, the final tranche was authorized.

Pakistan and the International Monetary Fund (IMF) came to a staff-level agreement last month about the last assessment of a $3 billion loan package.

The total amount of $1.9 billion that the nation has received thus far is divided into two tranches: $1.2 billion in July and $700 million in January 2024.

According to Finance Minister Muhammad Aurangzeb, Islamabad could have a staff-level agreement on the new program by early July. Pakistan is asking the IMF for a fresh, longer-term loan.

In order to support macroeconomic stability and carry out long-overdue and difficult structural changes, Islamabad says it is seeking a loan for a minimum of three years; however, Aurangzeb has reluctant to specify the specific program in question. If approved, it would be Pakistan’s 24th IMF bailout.

See Also: Pakistan formally requests new IMF assistance

The event transpired on the day following Prime Minister Shehbaz Sharif’s meeting with IMF Managing Director Kristalina Georgieva, during which he reaffirmed the government’s resolve to restart Pakistan’s economy.

During the meeting held in conjunction with the World Economic Forum Special Meeting, the prime minister announced that he had given his finance minister, Muhammad Aurangzeb, strict instructions to implement structural reforms, maintain strict fiscal discipline, and pursue prudent policies that would guarantee macroeconomic stability and continuous economic growth.

Georgieva was commended by him for helping Pakistan obtain the $3 billion Standby Arrangement (SBA) from the IMF last year, which was about to be finalized.

Business

Macroeconomic circumstances in Pakistan have improved.

Published

2 days ago

Farwa

By virtue of the Board’s resolution, SDR 828 million, or roughly $1.1 billion, can be disbursed immediately, increasing the total amount disbursed under the arrangement to SDR 2.250 billion, or roughly $3 billion.

After being adopted by the Executive Board on July 12, 2023, Pakistan’s nine-month SBA effectively served as a framework for financial support from both bilateral and multilateral partners, as well as a policy anchor to resolve imbalances both domestically and internationally.

According to the official announcement from the IMF, Pakistan’s macroeconomic conditions have improved during the program. Given the ongoing recovery in the second half of the fiscal year, growth of two percent is anticipated in FY24.

With a primary surplus of 1.8 percent of GDP in the first half of the fiscal year 2024—well ahead of expectations and putting Pakistan on track to meet its target primary surplus of 0.4 percent of GDP by the end of the fiscal year—the country’s fiscal condition is still strengthening.

Even while it is still high, inflation is still falling and should end up at about 20 percent by the end of June if data-driven and adequately tight monetary policy is continued.

In contrast to 11.4 per cent last year, the IMF predicted in an official statement that Pakistan’s tax collection and grants will stay at 12.5% of GDP in FY2024.

After remaining at 7.8% of GDP in FY2023, the deficit is predicted to stay at 7.5% of GDP in FY2024.

Business

Pakistan’s fuel prices should drop.

Published

2 days ago

Farwa

At 0423 GMT, U.S. West Texas Intermediate crude prices fell 13 cents, or 0.16%, to $82.50 a barrel, while Brent crude futures were down 10 cents, or 0.11%, to $88.30 a barrel.

Both benchmarks’ front-month contracts saw losses of over 1% on Monday.

on line with the worldwide trend, the price of gasoline is anticipated to decrease by Rs. 5.4 per liter on the local market. In the same way, buyers in the Pakistani market may see a drop in the price of diesel of Rs8 a litre.

Additionally, it is anticipated that the prices of light fuel and kerosene will decrease by Rs5.40 and Rs8.3 per liter, respectively.

The finance ministry will receive a summary from the Oil and Gas Regulatory Authority (OGRA), and PM Shehbaz Sharif will be consulted before a final decision is made today.

The federal government raised the cost of gasoline by Rs. 4.53 per liter and diesel by Rs. 8.14 per liter at the most recent review.

At the moment, the price of gasoline was Rs 293.94 per liter, while the price of high-speed diesel was Rs 290.38 per liter.