Tuesday, December 31, 2024
Islamabad (UrduPoint News International/ Pakistan Point News - 11th Dec, 2024 ) Some experts say that the real problem is not just that the financially-strapped government of Pakistan has sold shares of Balochistan’s Reko Diq Gold Project at a low price. According to them, the real benefits of the project can be reaped by the government only when the agreement with the company working on the project is transparent and checks and balances can be maintained on it.
The government has repeatedly claimed that the Reko Diq Gold Project can be a game-changer for Pakistan and Balochistan. According to experts, if an effective system is not established that transparently discloses all the revenue generated from the project, what the government is getting will only be a temporary benefit while the long-term benefits will not reach the people.
Expressing his concerns, renowned economist Qaiser Bengali told DW, “I can only hope that this project does not suffer the same fate as Sendik because that project has not been able to give a single rupee to Balochistan till date and the reason for this is the lack of transparency.”
According to local media, the Pakistani government has approved the sale of 15 percent shares of the Reko Diq project to Saudi Arabia for $540 million under an intergovernmental agreement.
The federal government had a total of 25 percent share in the project, while the 25 percent share belongs to the Balochistan provincial government. The remaining 50 percent shares are owned by the project’s operating company, Barrick Gold.
Under the deal to sell its 15 percent shares by the federal cabinet, Saudi Arabia will pay in two installments. In the first phase, Saudi Arabia will buy 10 percent shares, for which $330 million will be transferred to Pakistan, while in the second phase, the remaining 5 percent shares will be bought for $210 million.
This is a major project
The Rekodic project is considered one of the world's largest undeveloped copper and gold mining projects. The reserves were discovered by Tethyan Copper Company, a joint venture between Barrick Gold and Antofagasta Minerals.
In 2011, Pakistan refused to grant the company a mining lease, after which the company approached the International Court of Justice.
As a result of losing the case, Pakistan was obliged to pay a fine of six billion dollars.
However, to avoid this fine, Pakistan renegotiated with the company and reached a settlement by giving it a fifty percent share. The remaining half of the shares of the project were divided between the federal and provincial governments.
Some experts say that although the Pakistani government was spared paying Tethyan six billion dollars in damages at that time, the value of the project was much higher than this fine.
Therefore, the price of the 15% stake sold to Saudi Arabia does not seem reasonable.
On the other hand, he is also optimistic that the deal can attract more investment in the region. According to Qaiser Bengali, “This is a large-scale project. It will have a positive impact on the Pakistani economy. Other companies are also showing interest and this is a good sign, but the country should proceed with caution.
‘’
How can transparency be ensured?
Experts pay more attention to the transparency of the project. Many experts are also convinced that investment by other countries in the project will promote more international investment in the region and this will create regional stability.
Former chairman of the Federal Board of Revenue and renowned economist Shabbar Zaidi agrees that the price of the federal government’s 15% shares does not seem justified according to the size of the project.
However, he says that this deal with Saudi Arabia also has some positive aspects.
"The fact that another state is a partner in the project shows the importance of the project and may attract more mining companies to invest in the region," Zaidi told DW. "This deal will pave the way for improving the security situation in Balochistan and regional stability."
''
Shabbar Zaidi also said that the Saudi government, which has joined the project as a silent partner, would also be interested in transparency. He confirmed that most of the transparency would be based on the project data that the company would provide.
He said that it seems that Pakistan will not benefit financially from the project in the short term, except for the job opportunities that it will provide.
The project is expected to create at least 8,000 jobs once it starts.
Qaiser Bengali says the Pakistani government should convince Tethyan to set up the initial units in Pakistan to process the materials obtained from the mines. Furthermore, he said, “Pakistan should lay a railway line from the project site to Gwadar Port to make the port more efficient and functional and provide access to economic resources to the region as a whole.”
Comments
Post a Comment