Islamabad, Feb 12 (AGENCIES): Pakistan and Saudi Arabia are likely to sign over USD 10 billion investment agreements, including a multibillion dollar oil refinery in Gwadar, during the upcoming visit of Crown Prince Mohammed bin Salman.
So far no date has been given for the visit of the Crown Prince but he is expected to arrive on a two-day trip before the end of this week.
Dawn reported that three major memorandum of understanding (MoUs) amounting to over USD 10 billion will be inked during the Saudi Prince’s visit.
“Three mega government-to-government MoUs will be signed and their total volume will be in double digit billion dollars,” Board of Investment (BoI) Chairman Haroon Sharif told the daily.
He said the three MOUs will be signed in the fields of oil refining, liquefied natural gas (LNG) and mineral development.
Besides the MoUs, other business agreements are also likely to be signed between businessmen and industrialist of the two sides.
“A group of top 40 Saudi businessmen is accompanying Prince Mohammed. The delegation will interact with the local business community. It is expected that some other private level agreements will also be inked during the visit,” the BoI chief said.
Talking about an oil refinery that Saudi Arabia will set up at Gwadar, Sharif said the facility will be established at a cost of USD 8 billion.
“Besides foreign investment, it will also provide job opportunities to the locals of the port city. If they [Saudis] also establish a petrochemical complex along with the refinery, it will require an additional investment of billions of dollars,” he added.
The Express Tribune reported that Prime Minister’s Adviser on Commerce and Investment Razak Dawood said it was likely that an agreement for USD 3 billion oil facility on deferred payments will also be signed during the visit.
Dawod said Pakistan will also ask Saudi Arabia to take part in the privatisation of over USD 2 billion worth of LNG-fired two power plants, although the kingdom had earlier showed interest in buying those units only under a government-to-government deal.
He did not put an exact investment figure by Saudi Arabia, as the precise size of the investment will be determined once a feasibility study of the oil refinery is ready.
The adviser estimated minimum USD 10 billion to USD 12 billion Saudi investment in Pakistan in the medium term.
He said the cost of the oil refinery will be in the range of USD 5 billion to USD 6 billion but if the Saudis decide to build a petrochemical complex the cost would increase close to USD 10 billion. The Prince will be accompany a by a strong Saudi delegation comprising 600 to 700 delegates.
His security team, comprising 170 personnel, has already arrived in Pakistan and is visiting various places in Islamabad.
Two five-star hotels and couple of three-star hotels have been booked for the delegates. In addition, media reports suggested that the PM’s House that had earlier been converted into a university will be used to host the royal guests.
The investment deals with Saudi Arabia will mark a partial departure from Pakistan’s decades-old policy of begging from Saudi Arabia in difficult economic times.
In 1998, after the nuclear explosions, Saudi Arabia had given free oil facility to Pakistan that continued for many years. In 2014, the then PML-N government had secured USD 1.5 billion “gift” from Saudi Arabia. However, the government did not issue official statement regarding the purpose of the grant.
This time also, Saudi Arabia has agreed to give USD 3 billion annual oil facility on deferred payments, which can be rolled over for three years period. In addition, Pakistan has also obtained USD 3 billion Saudi loan at 3.18 per cent interest rate to shore up official foreign currency reserves.