Pakistan looks to $12 billion Saudi investment during Crown Prince’s visit

Pakistan is poised to ink a number of investment deals with Saudi Arabia worth billions of dollars during an upcoming visit of Crown Prince Mohammad Bin Salman, including a multibillion dollar oil refinery in southwestern port city of Gwadar.

“Pakistan and Saudi Arabia will sign three memoranda of understanding for investment in oil, renewable energy and mineral sectors during the royal visit,” says Prime Minister’s Adviser on Commerce and Investment Abdul Razak Dawood.

An agreement for $3 billion oil facility on deferred payments will also be signed during the visit, according to the Ministry of trade officials.

Prime Minister Imran Khan’s government will also ask Saudi Arabia to take part in the privatization of over $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.

By The White House from Washington, DC. Cropped by User:Siqbal (President Trump’s Trip Abroad) [Public domain], via Wikimedia Commons

An estimated minimum $10 billion to $12 billion Saudi investment may flow into Pakistan in the medium term, the officials said.

A strong Saudi delegation comprising 600 to 700 delegates — including 40 private investors — will be flying into Pakistan this weekend, said Board of Investment Chairman Haroon Sharif.

Prince Mohammed is expected to arrive in Pakistan this week, although an exact date of his arrival has not yet been officially disclosed. It is expected the crown prince would arrive on Saturday or Sunday.

Gwadar Seaport Image: Umargondal (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

His security team, comprising 170 personnel, has already arrived in Pakistan and is visiting various places in Islamabad.

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, newspaper The News reported.

Photo: Imran Khan Official Facebook Page

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 $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 $3 billion annual oil facility on deferred payments, which can be rolled over for three years period.

Besides, Pakistan has also obtained $3 billion Saudi loan at 3.18% interest rate to shore up official foreign currency reserves.

Saudi Arabia’s main regional rival, Iran has welcomed the visit of Saudi Crown Prince Muhammad bin Salman (MBS) to Pakistan as well as the fiscal assistance Riyadh is extending to Pakistan.

Ambassador Iran Mehdi Honardoost recently told media representatives in capital Islamabad, that not only Saudi Arabia but any of Arab countries support for Pakistan would be hailed by Iran evidently.

“We appreciate Saudi Arabia’s cooperation and help for Pakistan hundred percent.”