Saudi investments to aid cash-strapped Pakistan

A Pakistani vendor arranges his stall near vehicles covered with snow during a snowfall in Murree, some 65 km north of Islamabad, on January 5, 2019. (File/AFP)
Updated 17 February 2019

Saudi investments to aid cash-strapped Pakistan

  • At the heart of the investment is a reported $10 billion refinery and oil complex in the strategic Gwadar Port on the Arabian Sea
  • Riyadh and Islamabad, decades-old allies, have been involved for months in talks to hammer out details of the deals in time for the high-profile visit

DUBAI: A record investment package being prepared by Saudi Arabia for Pakistan will likely provide welcome relief for its cash-strapped Muslim ally, while also addressing regional geopolitical challenges, analysts say.
At the heart of the investment is a reported $10 billion refinery and oil complex in the strategic Gwadar Port on the Arabian Sea, the ultimate destination for the massive multi-billion dollar China Pakistan Economic Corridor, which lies not far from the Indo-Iranian port of Chabahar.
Two Saudi sources have confirmed to AFP that heir apparent to the Gulf kingdom’s throne, Crown Prince Mohammed bin Salman, will visit Islamabad shortly, without giving a date.
And a number of major investment deals are expected to be signed during a visit, officials from both countries have told AFP.
Riyadh and Islamabad, decades-old allies, have been involved for months in talks to hammer out details of the deals in time for the high-profile visit.
“The outcome of the talks so far has been very positive and this is going to be one of the biggest-ever Saudi investments in Pakistan,” a Pakistani senior finance ministry official told AFP.
“We hope that an agreement to this effect will be signed during the upcoming visit of the Saudi crown prince to Pakistan,” said the official, requesting anonymity.
The Wall Street Journal reported last month that both Saudi Arabia and the United Arab Emirates, Islamabad’s biggest trading partner in the Middle East, have offered Pakistani Prime Minister Imran Khan some $30 billion in investment and loans.

Riyadh investments

Riyadh investments are expected to provide a lifeline for Pakistan’s slumping economy which was downgraded in early February by S&P ratings agency from a B to a B-, Saudi economist Fadhl Al-Bouenain said.
“Saudi investment to Pakistan comes within an economic aid package aimed at relieving the stress of external debt and a shortage of foreign currency, besides boosting the sluggish economy,” Bouenain told AFP.
The OPEC heavyweight also aims to achieve strategic and commercial goals with investments in infrastructure and refinery projects, he said.
Saudi Arabia and its Gulf partner, the UAE, have already deposited $3 billion each in Pakistan’s central bank to help resolve a balance of payments crisis and shore up its declining rupee.
They have also reportedly deferred some $6 billion in oil imports payments as Islamabad has so far failed to secure fresh loans from the International Monetary Fund.
Khan has already visited Riyadh twice since taking office in July and in October attended a prestigious investment conference widely boycotted by other political and economic figures after the murder of journalist Jamal Khashoggi.
Khan also visited Saudi rivals Qatar and Turkey, as well as China seeking investments.
“One of the goals for Saudi Arabia expanding investments in refining worldwide is to secure market share and sustainable exports in the face of international competition,” Bouenain said.
Saudi Energy Minister Khalid Al-Falih visited Gwadar in January and inspected the site for the proposed oil refinery at the deep sea port, just 70 kilometers (45 miles) away from its Iranian competitor, Chabahar.
He was quoted by local media as saying the kingdom was studying plans to construct a $10 billion refinery and petrochemicals complex in Gwadar.

Petrochemicals projects

Like most oil suppliers, the world’s top crude exporter has been investing heavily in refinery and petrochemicals projects across the globe to secure long-term buyers of its oil.
A pipeline from Gwadar to China would cut the supply time from the current 40 days to just seven, experts say.
Developed as part of China’s Belt and Road Initiative with investments worth some $60 billion, Gwadar is being billed as a regional industrial hub of the future, easily accessible for Central Asia, Afghanistan, the Middle East and Africa.
“Pakistan needs a rich partner to enter as a third party besides China, capable of injecting needed cash,” Bouenain said.
But so far China has rejected other partners for the corridor that seeks to connect its western province Xinjiang with Gwadar, including Saudi Arabia and UAE, said James M. Dorsey, a senior fellow at Singapore’s S. Rajaratnam School of International Studies.
This is despite calls by Khan “for the Chinese investments to be restructured to include agriculture and job-creation sectors and not only in infrastructure,” Dorsey told AFP.
Any Saudi investment in Gwadar will also have geopolitical dimensions, Dorsey said.
Iran late last year inaugurated Chabahar which provides a key supply route to landlocked Afghanistan and allows India to bypass its historic enemy Pakistan.
India has seen Chabahar as a key way both to send supplies to Afghanistan and to step up trade with Central Asia as well as Africa.
But Riyadh is not expected to get involved in any Indo-Pakistani rivalry and the kingdom also has major strategic energy deals with New Delhi, where demand for oil is growing fast.
Indeed in April, the Saudis signed a $44 billion deal to build a huge refinery and petrochemicals complex in western India.


UK PM raises visas in pitch for post-Brexit trade with Africa

Updated 20 January 2020

UK PM raises visas in pitch for post-Brexit trade with Africa

  • Boris Johnson told leaders including presidents Abdel Fattah El-Sisi of Egypt and Uhuru Kenyatta of Kenya that he wanted to make Britain their investment partner of choice
  • Boris Johnson: By putting people before passports we will be able to attract the best talent from around the world, wherever they may be

LONDON: Prime Minister Boris Johnson told African leaders Monday that Britain would be more open to migrants from their continent after Brexit as he hosted a summit intended to boost trading ties.

He also promised an end to direct UK state investment in thermal coal mining or coal power plants overseas, saying London would focus on supporting a switch to low-carbon energy sources.

Johnson was speaking at the start of the first UK-Africa Investment Summit in London, a clear pitch for business less than two weeks before Britain leaves the European Union.

He told leaders including presidents Abdel Fattah El-Sisi of Egypt and Uhuru Kenyatta of Kenya that he wanted to make Britain their “investment partner of choice.”

After highlighting all that Britain has to offer, he said Brexit would mean an end to preferential treatment for EU migrants.

“Our (immigration) system is becoming fairer and more equal between all our global friends and partners, treating people the same, wherever they come from,” he said.

“By putting people before passports we will be able to attract the best talent from around the world, wherever they may be.”

The Duke of Sussex, Prince Harry, was also in attendance where he met with leader from Malawi, Mozambique and Morocco.

 
 
 
 
 
 
 
 
 
 
 
 
 

This morning at the UK-Africa Investment Summit, hosted by the UK Government, The Duke of Sussex met with leaders from Malawi, Mozambique and Morocco - touching on investment in renewable energy, jobs, tourism, and environmental issues. The Duke has been involved in various causes in Africa for over a decade, and has helped to initiate a number of key projects in the region surrounding conservation and tourism, the threat posed by landmines and the HIV/AIDS epedemic. During their recent visit to Southern Africa last September, The Duke and Duchess met with project teams working to encourage youth employment, entrepreneurship, education and health. Through their roles as President and Vice President of The Queen’s Commonwealth Trust, The Duke and Duchess have worked to support a growing network of young change-makers across the Commonwealth and will continue to do so, especially in the run up to CHOGM 2020. The Duke of Sussex’s love for Africa is well known - he first visited the continent at the age of thirteen and more than two decades later, the people, culture, wildlife and resilient communities continue to inspire and motivate him every day. Photo © PA

A post shared by The Duke and Duchess of Sussex (@sussexroyal) on

Nigeria’s President Muhammadu Buhari, who also attended the summit, said Brexit offered an opportunity for increased free trade across the Commonwealth — and said visas were a key issue.

“While many in the African diaspora enjoy considerable benefits from life in the West, they do not always feel at the heart of the community,” he wrote in an article for The Times on Monday.

“A renewed sense that there are ties that bind us through the Commonwealth, and a concerted effort to grow those links through trade, could act as a spur to encourage togetherness and the certainty of belonging.”

Johnson, whose country hosts the next UN climate change summit in Glasgow later this year, also announced a shift in investment strategy to help combat global warming.

Sub-Saharan African faces a number of environmental challenges, particularly the effects of climate change, water and air pollution, desertification, deforestation and over-fishing.

On fossil fuels, Johnson said: “There’s no point in the UK reducing the amount of coal we burn, if we then trundle over to Africa and line our pockets by encouraging African states to use more of it, is there?“

“We all breathe the same air, we live beneath the same sky. We all suffer when carbon emissions rise and the planet warns.”

He added: “Not another penny of UK taxpayers money will be directly invested in digging up coal or burning it for electricity.

“Instead, we’re going to focus on supporting the transition to lower and zero carbon alternatives.”

The British government’s export agency reports providing £2 billion ($2.6 billion) in financing for UK company exports to Africa in the past two years. The agency says it now wants to “increase its risk appetite” in Egypt and the emerging economies in Nigeria and Rwanda.

The UK government said the London summit will see British and African firms announce commercial deals worth £6.5 billion.

It did not spell out whether these were all firm commitments or included memorandums of understanding that do not always result in actual deals.

Britain will leave the EU on January 31, although ties will remain the same for 11 months while the two sides thrash out a new trading relationship.

The UK has said it will be leaving the bloc’s single market and customs union.

Johnson wants the freedom to strike trade deals with other countries, even at the expense of some of its producers facing trade tariffs and quotas as a result.