Bilateral investment treaty talks and MoUs on agenda for Saudi delegation visit

A prominent delegation of 32 major private sector companies from Saudi Arabia, led by Minister for Investment Khalid al-Falih, is set to visit Pakistan from October 9-11, 2024, according to sources in the Commerce Ministry reported by Business Recorder.

The sources noted that six companies from Saudi Arabia have expressed interest in the energy sector, and a Memorandum of Understanding (MoU) is anticipated to be signed between the two nations.

Discussions will also cover the long-pending Bilateral Investment Treaty (BIT), which has faced delays due to disagreements on investment protection issues. GCC countries, including Saudi Arabia, are seeking special considerations for their investments in Pakistan at the B2B level, with the Pakistani government showing willingness to amend the BIT in line with GCC proposals.

Pakistan is projecting an investment influx of approximately $15-20 billion from Saudi Arabia across various sectors, including the acquisition of public sector entities or share purchases. Saudi Arabia is particularly interested in the hotel sector, renewable energy initiatives—especially solar projects in South Punjab—Reko Diq, and a petrochemical refinery. In May 2024, the Federal Government proposed two sites in prime areas of Islamabad for hotel development to Saudi investors.

The Petroleum Division plans to discuss a joint venture with China’s Sinopec for establishing a petrochemical refinery; however, previous attempts have not been successful.

The Ministry of Commerce has been directed by the Prime Minister to organize key arrangements for the delegation’s visit on October 10, 2024. These arrangements include (i) a Sectoral Breakout Session coordinated by the Ministry of Energy (Power Division) with relevant regulatory entities; and (ii) B2B meetings between Saudi companies and local businesses operating in the energy sector.

The Prime Minister’s Office has also requested an update regarding K Electric (KE), as a representative from the Saudi company Al-Jomaih is expected to be part of the official delegation. Additionally, while Saudi Arabia has shown interest in investing in a solar PV power project in South Punjab, such plans may not move forward due to excessive generation and extensive solarization within the country.

Pakistan plans to urge the Saudi Investment Minister to consider investing in the Diamer Bhasha Hydropower Project, which requires $8 billion, but discussions on this have yet to yield an agreement.