Addressing Riyadh’s Concerns Clearing the Path for Saudi Investment in Pakistan

In a bid to secure a substantial investment ranging from $25 billion to $30 billion from Saudi Arabia for copper, minerals, refinery, and solar projects, Pakistan faces the crucial task of addressing three major concerns raised by Riyadh. These concerns must be resolved to pave the way for the realization of billions of dollars in investments in viable projects.

The Special Investment Facilitation Council, jointly managed by the military establishment and civilian authorities, is actively working to remove obstacles and create an attractive environment for investment.

First and foremost, Saudi Arabia has expressed keen interest in constructing a refinery in either Hub or Gwadar, representing a significant estimated investment of $10 to $12 billion in Pakistan. Discussions on this project began in 2019, but it has yet to implemented.

One of the primary concerns voiced by Saudi Arabia pertains to the 18th constitutional amendment, which has led to delays in the petroleum investment policy due to provincial involvement. Additionally, the concessions granted under this policy have not met Saudi Arabia’s expectations, further hindering progress on the refinery project. However, officials engaged in negotiations with Saudi Arabia assert that significant progress has achieved, and they now poised to finalize a substantial deal and commence construction on the refinery, which has the potential to attract $10-12 billion in investment to the Hub region.

Saudi Arabia has also expressed interest in investing in the Rekodic project, with a desire to acquire a 10 to 20 percent stake in it. The Rekodic project is a joint venture involving Barrick Gold Corporation, the Government of Balochistan, and the Government of Pakistan, with each party owning a respective 55% stake. Phase 1 has set to receive a $4 billion investment, followed by $3 billion in Phase 2, with production slated to begin in FY 2027-28. To mitigate risk for these multi-billion dollar projects, the International Finance Corporation will provide risk insurance.

A key challenge arises when considering the potential sale (offloading) of 10 to 20 percent of Pakistan’s shares in the project, which could result in a loss of management control. To address this concern, Islamabad is actively working to persuade Barrick Gold to divest equal stakes from both sides, ensuring that management control remains balanced and does not hinder progress on this high-value project.