The Economic Coordination Committee (ECC) approved on Sunday a proposal pertaining to the federal government’s six–year funding plan for the Balochistan government’s share amounting to $717 million in the Reko Diq project.
On Friday, the Supreme Court declared an agreement signed between the Pakistan government and two international firms — Antofagasta PLC and Barrick Gold Corporation — in March for the revival of the long-stalled Reko Diq mining project as legal.
According to a Finance Division press release issued today, the ECC considered and approved two important agenda items related to Reko Diq, “thus paving the way for the early start of the project”.
Finance Minister Ishaq Dar presided over the ECC meeting virtually.
The press release added that the energy ministry submitted a summary of accrued interest with respect to the amount held in an escrow account in connection with the Reko Diq project dispute settlement.
The statement highlighted that the federal and Balochistan government entered into an out-of-court dispute settlement with Tethyan Copper Company Pvt Limited with respect to the project.
“In the light of the terms of the agreed settlement, the ECC allowed Finance Division to direct GHPL (Government Holding Private Limited), OGDCL (Oil and Gas Development Company) and PPL (Pakistan Petroleum Limited) to deposit the aggregate amount of interest to the sum of $22,718,173 in the escrow account from March 31, 2022, to December 15, 2022,” it reads.
According to the statement, the ECC allowed the Finance Division to arrange the interest payable for the Balochistan government’s share amounting to $8,519,314 from the loan of Rs65 billion already raised by GHPL with the federal government’s guarantee.
“ECC allowed the concerned divisions of the federal government and the state-owned enterprises (SOEs) to act in such a manner to ensure that the deposited amount along with interest deposited by the SOEs in the escrow account, form part of the consideration for share purchase of Reko Diq Mining Company Limited,” it further read.
Reko Diq deal
The original agreement for the Reko Diq mining project was signed in 2006, and it set aside a share of 37.5 per cent to Canada’s Barrick Gold and Chile’s Antofagasta each while the Balochistan government received a 25pc stake.
The two international firms were part of the consortium Tethyan Copper company and had found vast gold and copper deposits at Reko Diq in Balochistan.
But the hugely lucrative open-pit mine project came to a standstill in 2011 after the local government refused to renew Tethyan Copper’s lease, and in 2013 Supreme Court declared it invalid.
In 2019, the World Bank’s arbitration tribunal committee imposed a penalty on Pakistan for unlawful denial of mining.
However, in March, the federal and Balochistan governments reached an agreement with two international firms — Antofagasta PLC and Barrick Gold Corporation — on a framework to reconstitute the Reko Diq project that allowed Antofagasta to make an exit.
The reconstituted project, which will excavate gold and copper reserves in Balochistan, saved Pakistan from an $11 billion penalty in the Reko Diq case.
Under the new agreement, Barrick decided to become a 50 per cent partner with the governments of Pakistan and Balochistan and three state-owned entities in the project, while the Chilean firm exited the contract in exchange for $900 million by Pakistani shareholders.
Balochistan government holds a 25pc stake in the project under the new pact and the rest of the 25pc shareholding is controlled equally (8.33pc) by the three state-owned enterprises.
On October 18, President Dr Arif Alvi moved a reference seeking the apex court’s opinion on the proposed reconstitution of the Reko Diq project in Balochistan and interpretation on whether its 2013 judgement in the case prevented the federal and provincial governments from entering into the implementation agreement and the constitutionality of the proposed Foreign Investment (Protection and Promotion) Bill 2022.