Saudi Arabia expected to take part in CPEC projects

ISLAMABAD: Saudi Arabia is expected to purely invest on commercial basis in various projects, including those under China-Pakistan Economic Corridor (CPEC) framework, Adviser to Prime Minister on Commerce Abdul Razak Dawood said on Friday.

“It [Saudi investment] is not in competition [with China], but it is adding on,” Dawood said during a joint press conference with Chairman Board of Investment (BoI) Haroon Sharif.

Saudi Arabia’s crown prince Mohammed bin Salman is to arrive in Pakistan this week with the promise of billions of dollars in cash, subsidies and investment for the kingdom’s cash-strapped ally.

Crown prince will be accompanied by 30 private sector businessmen and dozens of other government officials. They would explore economic opportunities in the country.

“They are coming on pure commercial basis, keeping in view the returns on their investment,” commerce adviser said. “We have to watch out the country’s interest… we would give them adequate return on their investment.”

The adviser said Saudis are also planning to take part in ‘open bidding’ of privatisation of two re-gasified liquefied natural gas-based power plants, including 1,223 megawatts of Balloki power plant and another 1,230MW power station in Haveli Bahadur Shah.

“Pakistan is not a very cheap energy country,” he added. “We have to reduce electricity cost to make the generation cost competitive. It would make our products competitive in world market. Over the last years, cost has come down [in solar and wind] energy.”

Dawood said investments in infrastructure, including power sector, under the CPEC has reduced power shortage to a large extent during the last five years.

The adviser said they are also interested to invest in mineral sector, as they have good experience. It would benefit the country, especially Balochistan and Khyber Pakhtunkhwa. They would carry out studies on mineral sites in Pakistan and if they found it commercially viable, then they would bring investment in the sector.

On a question about viability of refinery and its huge distance from major urban centers, Dawood said: “Yes, we know this is one of the things they would be looking at”. “Crude oil will come from Saudi Arabia and would be refined here and sold in Pakistan and can also be exported.”

The adviser said as they would be starting work on feasibility study, they are going to decide how competitive it is. It can also sell downstream products of the refinery.

To a question, Dawood said anybody could come to Pakistan to invest. A Saudi-Pak Supreme Coordination Council would be co-chaired by Muhammad Bin Salman and Prime Minister Imran Khan. The council aims to unite efforts and raise level of coordination between two countries to achieve mutually agreed political, economic and development objectives. Three pillars: political and security, economic and social and cultural would be managed by steering committees. “After this trip ends, we would go for implementation.”

Dawood said Pakistan would decide with the passage of time what benefits “we would be extending on their investments.”

“It must be a win-win situation,” he said. “We want that investors should also get their good returns and also Pakistan gets its benefits. However, this is always decided after the feasibilities get complete, it is now too early to say something.” On India’s step of withdrawing Pakistan’s most favoured nation status, he said Pakistan “would not overreact”.

“However, we have three options including unilateral, bilateral under South Asian Free Trade Area and multilateral under World Trade Organization,” he added. “We would take action under a great care, let’s not overreact.”

Dawood said Pakistan’s exports to India are around $300 million/annum, while Indian exports to Pakistan are more than a billion dollars. “We want to be a nation interlinked with the world.”

Sharif, who is also minister of state, said the government is to sign four major memoranda of understanding with the Saudi government for setting up a big oil refinery in Gwadar, alternative energy, mineral resources and one for projects financing under Saudi Fund for Development. Under the MoUs, projects would be executed under government to government arrangement, he said.

“For the last many years, the world was seeing Pakistan through the lens of security, now it is seeing it through the lens of investment and stability,” he said. “Now, the Saudis are coming to Pakistan for long-term investment.”

Chairman BOI said Saudi Arabia and Pakistan would hold joint investment and economic conferences to attract investment in Pakistan’s agriculture, food, and emerging technology in IT, construction and some other sectors. “Business to business meetings will be arranged to ensure materialisation of investment projects.”