Pakistan and Saudi Arabia have reached a preliminary agreement for Islamabad to sell a 15% share of its holdings in the Reko Diq mining project to Saudi investors.
This move comes as Barrick Gold Corporation, a key stakeholder in the project, declined to divest its shares in this multibillion-dollar venture.
The divestment will adjust Pakistan’s total share in the project from 50% down to 35%, according to a report by The News. The provincial government of Balochistan will maintain its 25% stake, while the share held by Pakistan’s federal government’s State-Owned Enterprises (SOEs) will decrease from 25% to 10%.
This development positions Pakistan as a minority shareholder, a change that, according to official sources, is manageable given Pakistan’s prior experience with joint ventures in various sectors, including telecommunications and banking.
Officials reassured that protective clauses in the current Reko Diq agreement would prevent Barrick Gold from making unilateral decisions, particularly concerning significant investments. These provisions ensure that Pakistan can intervene if necessary, maintaining some level of control over the project’s direction.
The anticipated deal comes at a critical time, as Pakistan’s investment-to-GDP ratio has hit a historic low over the past 50 years. The involvement of Saudi Arabia is expected to boost the investment climate significantly.
Top government officials indicated that an official announcement regarding the agreement is expected in the coming weeks. This deal is part of a broader strategy to enhance foreign investment, with Saudi Arabia expressing interest in increasing its stakes further in the future.
Additionally, the signing of the Free Trade Agreement (FTA) with the Gulf Cooperation Council (GCC), which includes a Bilateral Investment Treaty (BIT) providing international arbitration rights, is set to reinforce this investment framework.
High-level visits between Pakistan and Saudi Arabia, including recent trips by Pakistan’s Chief of Army Staff and a Saudi minister to Pakistan, have been instrumental in advancing these multibillion-dollar investment discussions.
With the ratification of the FTA and BIT awaiting final signatures, Pakistan has agreed to a structured process for resolving investment disputes, incorporating an obligatory eight-month domestic resolution period before escalating to international arbitration forums such as the Permanent Court of Arbitration (PCA) or International Centre for Settlement of Investment Disputes (ICSID).
