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December 31, 2017

Capital suggestion


December 31, 2017

National interest

Dr Farrukh Saleem

Reko Diq: In 1993, the government of Balochistan signed a contract with BHP, an Australian mining company. The mine holds 5.9 billion tons of copper and 41.5 million ounces of gold. The government of Balochistan signed away a 75 percent share to BHP and a paltry two percent royalty for the government.

Red alert: Pakistan may now face a penalty of $11.5 billion as the World Bank’s International Center for Settlement of Investment Disputes (ICSID) has rejected Pakistan government’s application on “grounds of corruption and malpractices”. What did Pakistan get out of the $3 trillion project? Has the government of Balochistan been acting in Pakistan’s national interest?

Saindak Cooper & Gold: In 2002, Pakistan’s state-owned Saindak Metals Ltd. (SML) and Metallurgical Corporation of China (MCC) signed a 10-year contract. The contract was to expire in 2012 but was extended till October 31, 2017. The contract has once again been extended for another five years on existing terms and conditions.

Red alert: Is it in Pakistan’s national interest when the federal government signs secret agreements with foreign companies? For the record, the government of Pakistan allowed the Chinese company a period of 15 years for “uninterrupted exploitation” of the $500 billion cooper and gold project. What did Pakistan get out of the project?Quaid-e-Azam Solar Power (Private) Limited: In 2014, the government of Punjab signed a contract with TBEA Xinjiang Co Ltd. to build a 100MW solar power station named in honour of Quaid-e-Azam Muhammad Ali Jinnah.

Red alert: On March 19, 2015, the National Electric and Power Regulatory Authority (Nepra) approved a tariff of Rs18.0397/kWh. The capital cost of the Quaid-e-Azam Solar Power Project stands at around $1.5 million per MW. On February 10, 2017, Solenergi Power of Sweden bid an equivalent of Pakistani Rs5.19/ kWh for Rewa Solar Park in Madhya Pradesh (India) for a capital cost of $690,000 per MW.

Is it in the interest of 210 million Pakistanis when the government of Punjab signs a contract with a Chinese company to build a solar power project at a cost of $1.5 million per MW? Who is minding our national interest? India: On September 11, 2017, India’s Petronet renegotiated a 20-year contract with ExxonMobil winning a price cut in a “rare contract renegotiation……in a heavily oversupplied global market”.

On October 4, 2017, Gas Authority of India Limited (GAIL) stated that “after getting Qatar and Australia to lower gas price, India is seeking to renegotiate rate of LNG it has contracted from the US and Russia to reflect current market realities.” Our government signed a Free Trade Agreement (FTA) with China. How has it helped Pakistanis? Our government has signed FTAs with Malaysia and Indonesia – both have actually hurt Pakistanis. Red alert: Our government is now in negotiations with Turkey, Thailand, Singapore, Iran and Bangladesh.

Over the recent past, neither our federal government nor our provincial governments have signed an agreement with foreign countries or companies based in foreign lands that has benefited the citizens of Pakistan. Who is then minding our national interest?

Long-term agreements to buy expensive electricity and long-term agreements to buy expensive gas are costing Pakistani consumers at least $10 billion in additional input costs per year. Consequently, our export sector will never be competitive – unless we renegotiate.

What did the citizens of Pakistan get out of Reko Diq? We got nothing out of Saindak. Who can afford Quaid-e-Azam Solar Park’s electricity at a tariff of Rs18.0397/kWh? If India can renegotiate its long-term LNG contracts why can’t we?

The writer is a columnist based in Islamabad.

Email: [email protected] Twitter: @saleemfarrukh

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