Crown prince’s visit will be a new milestone in Pak-Saudi relations

Arif Qureshi

Saudi Crown Prince Mohammad bin Salman (MBS) is coming today on historic visit of Pakistan where Pakistan and Saudi Arabia will ink a USD20 billion projects including a 10 billion dollars Saudi Aramco oil refinery in Gwadar. It is also expected that Islamabad and Riyadh will sign eight additional memorandum of understating (MOUs) pertaining to cooperation in mineral resources, petrochemicals, renewable energy and mining apart from the $10bn plus Saudi investment. The $10bn investment will be in addition to the Saudi package of $6bn approved by the kingdom to Pakistan during Prime Minister Imran Khan’s visit to Saudi Arabia in October last year.

both the countries would sign eight MoUs on varying fields during the Crown Prince’s visit who is scheduled to land in the federal capital on Saturday for two-day visit, at the invitation of Prime Minister Imran Khan.Foreign Office Spokesperson Dr Muhammad Faisal said in a tweet that Pakistan and Saudi Arabia would sign MoUs in the fields of mineral resources, development of renewable energy projects, drug control, smuggling and psychotropic substances. Other MoUs would be relating to diverse sectors including investment, finance, power, renewable energy, internal security, media, culture and sports.

In January a high level delegation headed by Khalid Al Falih, the Minister of Energy, Industry, and Mineral Resources of the Kingdom of Saudi Arabia visited port city Gwadar to inspect the land allocated for a proposed oil refinery. Upon his arrival Federal Petroleum Minister Ghulam Sarwar Khan, Ali Haider Zaidi, Federal Minister for Maritime Affairs, deputy ambassador of Saudi embassy in Pakistan Habib Ullah Bukhari received the visiting dignitary.

On the occasion Federal Petroleum Minister Ghulam Sarwar said that the Saudi funded oil refinery would be a ‘state-of-the-art facility’ and one of the biggest investments of the Saudi government in Pakistan. He said this refinery will be the world’s third largest and Memorandum of Understanding was expected to be signed next month. Khan clarified that China has no concerns regarding the Saudi investment in Gawadar rather it will supply oil to Pakistan and China.

Currently, the total refining capacity of Pakistan is around 300,000 barrels per day, with Pak Arab Refinery (PARCO), which is a joint venture between Pakistan and Abu Dhabi, having a refining capacity of 100,000. The proposed Saudi refinery will have a capacity of 250,000 barrels per day.

Earlier in October, a delegation headed by the Saudi foreign minister visited the site and was briefed on the special economic zone set up there. It is reminded that it was a second high level Saudi delegation who visited Gawadar, earlier a Saudi investment delegation set a comprehensive visit to Gawadar Port in first week of January. The Delegation was comprised of senior officials from Saudi ministry of energy industry and natural resources, businessmen and investors from Saudi Arabia was led by Ahmad Algamdi, the adviser to Saudi Energy Minister were briefed in detail regarding development of the port.

Accompanying the investment delegation from Saudi Arabia during this, Fahim Alhamid Adviser to Saudi Media Minister said the Gawadar project is full of investment opportunities and the Saudi delegation visit was a unique chance to see investment opportunities which would be benefiting for the two brotherly countries. During the visit, the delegation witnessed all potential investment opportunities available in the Gawadar Port, investment opportunities available in special economic zones attached to CPEC.

Kingdom of Saudi Arabia has already issued a $6 billion bailout package for Pakistan’s ailing economy. The package includes $3bn balance of payments support and another $3bn in deferred payments on oil imports. Agreements in this regard were signed on the sidelines of the second edition of the annual Future Investment Initiative (FII) Conference in Riyadh. It shows cases economic and investment opportunities in Saudi Arabia as it pursues Vision 2030 for diversifying its economy.

It was further agreed that a one year deferred payment facility for import of oil, up to USD 3 Billion, will be provided by Saudi Arabia. This arrangement will be in place for three years, which will be reviewed thereafter. Pakistan imports 110,000 barrels of crude per day from Saudi Arabia.

According to the analysts the Saudi package may provide breathing space to the government for dealing with economic challenges, but would not be enough to avoid the IMF facility. It is believed that improved foreign exchange reserves would strengthen Pakistan’s negotiating position in talks with the Fund.

Saudi Arabia has in the past also helped rescue Pakistan’s economy from dire situations on a number of occasions. The Kingdom had last time in 2014 gifted Pakistan $1.5bn to beef up its foreign exchange reserves.

Pakistan has received more aid from Saudi Arabia than any country outside the Arab world since the 1960s. For example, in May 1998 when Pakistan was deciding whether to respond to India’s test of five nuclear weapons, the Saudis promised 50,000 barrels per day of free oil to help the Pakistanis cope with the economic sanctions that might be triggered by a counter test. The Saudi oil commitment was a key to then Prime Minister Mian Nawaz Sharif’s decision to proceed with testing. It cushioned the subsequent U.S. and EU sanctions on Pakistan considerably.

Kingdom always extends economic cooperation to Pakistan in hour of need. Similarly, remittances by workers from Saudi Arabia play a vital role to strengthen balance of payment of Pakistan. According to a rough estimate, the value of trade between Islamabad and Riyadh is above $2.5 billion. Pakistan mainly imports oil and oil products from Saudi Arabia, which accounts for 90 percent of our total import bill for the Kingdom. Pakistan supplies rice, meat, meat products, spices and fruit, home textile products, chemicals, footwear and leather goods. Pakistan’s exports to Saudi Arabia have seen tremendous growth in recent years.

In the recent developments Saudi Arabia has shown its desire to invest in many sectors including petrochemicals, dairy, livestock, mining etc. Recently kingdom has appointed a full fledge commercial attaché in Islamabad to review the specific areas of opportunities in business and trade sectors. No doubt the much credit goes to present ambassador of Kingdom of Saudi Arabia to Pakistan Nawaf bin Saeed Al-Maliki who is pursuing, working day and night to touch those areas of bilateral relations which remained untouched in the past.

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