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Pakistan to sign MoUs worth up to $15b with Saudi Arabia during crown prince’s upcoming visit

February 12, 2019

Pakistan is expected to get more investment during the upcoming visit of Saudi Crown Prince Mohammad bin Salman. 

The federal government will sign three vital Memorandums of Understanding (MoUs) with the Saudi government during the visit, said Haroon Sharif, the chairperson of the Board of Investment, while talking to SAMAA TV on Tuesday.

Saudi Arabia’s Crown Prince Mohammad bin Salman will arrive in Pakistan on a two-day visit on February 16, the Saudi ambassador in Pakistan Ambassador Nawaf bin Said Al-Maliki said Monday.

“The first ever visit by the Saudi crown prince is highly important for Pakistan and its economy,” the BOI chief said. “The bilateral economic and trade ties will be strengthened as a result of this royal visit.” Sharif shared that investment worth over $10 to $15 billion is expected to come into Pakistan. He said 40 major businessmen from the private sector are coming to Pakistan along with the top Saudi dignitaries.

“The two countries will sign more than 10 MoUs in different fields including oil refinery, petrochemical complex, minerals, alternate energy, oil facility on deferred payments and exchange of prisoners etc,” he said.

Related: Pakistan, Saudi Arabia to sign $15b Gwadar oil refinery deal in Feb

The BOI chairperson highlighted the significance of the visit. “There are two investment angles of the visit. One pertains to the Saudi government-owned companies like Aramco and ACWA Power that are looking forward to install an oil refinery in Gwadar,” Sharif said.

“Moreover, they are interested in investing in sectors of alternative energy and mineral development too.”

Pakistan is likely to sign a number of investment deals, including the construction of multi-billion-dollar oil refinery in the port city of Gwadar, during Crown Prince Salman’s visit. Saudi Arabia had already pledged a $6 billion package for Pakistan.

In the field of alternative energy solar and wind power plants will be installed with estimated investment of $ 2 billion. This is going to be the biggest investment by Saudi companies in Pakistan on commercial basis, said the BOI chairperson.

“It is likely that an agreement for $ 3 billion oil facility on deferred payments will also be signed during the two day land mark visit of Crown Prince MBS,” he stated.

Replying to a question he said Pakistan and Saudi Arabia are entering into Geo Strategic plus economic cooperation ties, the government will not have any debt liability or extra burden of loan under the proposed agreements. Saudi companies will make investment purely on rate of returns basis; the government will facilitate them and protect their investment.

Related: Saudi Crown Prince Mohammad bin Salman to arrive in Pakistan on Feb 16

These kinds of projects normally take five years but technical and feasibility studies will be carried out on fast track basis and Saudi Investment likely to be start within next two years, he hoped.

“No government guarantee is involved; projects will run under commercial feasibility basis, Pakistan will offer 10 year income tax holiday and five-year tax exemption on import of plant and machinery as per existing law ,” the BOI chairperson said.

“We are going to install same kind of oil refinery at Khalifa point near Hub with the help of the United Arab Emirates,” he added.

He said that with the installation of these two new oil refineries Pakistan’s per day oil production capacity will be enhanced to 900,000 barrels per day from the existing 300,000 barrels per day. Besides Saudi Arabia, a number of other countries are also interested in investing in Pakistan, including Qatar, Malaysia, the UAE, South Korea and Germany, Sharif said.

“We are expecting $40 to $50 billion project-based investment in the next five years in Pakistan and yes we have commitments by various countries and companies,” he said.

The priority of Gulf counties is oil and petrochemical sector while South Korean, German and Chinese companies want to establish auto mobile plants. Qatar is interested in investing in the hospitality and food sector. Other sectors include agriculture, minerals, tourism, construction and agro-based industries.

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