March 27, 2023 (MLN): The Economic Coordination Committee (ECC) has approved a proposal by the Ministry of Energy (Petroleum Division) to arrange a finance facility for the funding of the government of Balochistan's share of obligations in the Reko Diq project dispute settlement.
Accordingly, the ECC directed the Finance Division to arrange the payment of a markup amounting to Rs6.23 billion for the period from March 31, 2022, to December 30, 2022, to the National Bank of Pakistan (NBP) for the short-term finance facility of Rs 65 billion.
The Reko Diq project, a copper and gold mining venture in Balochistan, has been the subject of a long-standing legal dispute between the government and the mining company Tethyan Copper Company (TCC).
In 2019, the International Centre for Settlement of Investment Disputes (ICSID) ordered Pakistan to pay $5.8bn in damages to TCC for revoking the mining lease. The government has been seeking ways to settle the dispute, which has raised concerns about the country's investment climate.
This approval of the finance facility by the cabinet is a crucial step towards resolving the dispute and fulfilling the government's obligations to the mining company.
The payment of the markup to the NBP will provide the short-term finance needed to fund Balochistan's share of the settlement.
To recall, Barrick Gold Corporation and the government of Pakistan reached an agreement in March 2022, on a framework that provides for the reconstitution of the Reko Diq project in Balochistan province.
It is pertinent to mention that the former PM had left no stone unturned to make this development largely in favor of Pakistan as settling a long-running dispute, Pakistan had reached an out-of-court deal with Barrick in March 2022 that agreed to waive the $11bn penalties slapped against Pakistan by a World Bank arbitration court.
There is no doubt that with an unlock of the enormous value of Reko Diq, one of the world’s largest undeveloped copper and gold deposits, the country could reap significant economic benefits that would be reflected in augmented foreign direct investment and exports.
Particularly for Balochistan, Reko Diq would make the province the largest recipient of foreign investment in Pakistan while providing substantial benefits, including upfront social development spending, job creation, and skills development, and local investment opportunities.
On the employment front, the project is expected to employ 7,500 people during peak construction periods, and once in production will create about 4,000 long-term jobs.
Copyright Mettis Link News
Posted on: 2023-03-27T22:44:54+05:00
