ISLAMABAD: Pakistan has lined up over 25 potential projects aiming to draw in more than $32 billion from Saudi Arabia, promising higher returns than those offered in previous China-Pakistan Economic Corridor (CPEC) deals.
High Return Opportunities
Previously, a notable CPEC project set a 34 percent return rate for IPPs-related projects. Now, Pakistan is proposing a similar 34 percent IRR to attract Saudi investments into an Industrial Feedlot Fattening Farm in Punjab. This $25.4 million venture aims to rear 30,000 animals, producing 6,000 tons of meat annually.
Investment Diversity and Economic Benefits
Furthermore, IRR rates across various projects vary widely, ranging from 14-15 percent to as high as 50 percent. Specifically, Pakistan is seeking a $154 million investment for a Greenfield Mine in District Khuzdar, Balochistan. This project targets Barite, Lead, and Zinc extraction and promises a lucrative 50 percent IRR over its projected 30-year lifespan.
Strengthening Economic Stability
Moreover, the Special Investment Facilitation Council (SIFC), which includes both military and civilian leadership, has reported significant growth in forex profit repatriation. It increased from $220 million in FY2023 to $694 million in the July-Feb period of FY2024.
Supportive Economic Measures
Additionally, Pakistan secured a $3 billion Standby Arrangement from the IMF and is now preparing for a new bailout package to boost the State Bank of Pakistan’s reserves. This financial uplift will facilitate profit and dividend repatriation from Saudi investments.
Strategic Development Projects
Also, Islamabad has designated the Diamer Basha dam for a $1.2 billion investment and is actively seeking investors for a luxury five-star hotel, with land available from the Capital Development Authority. The SIFC operates as a “One Stop Shop” for investors, aiming to streamline processes and ensure macroeconomic stability across key sectors such as Defense, Agriculture/Livestock, Mines & Minerals, IT & Telecom, and Energy.
Resolving International Concerns
Similarly, Saudi concerns regarding Karachi Electric and Makhdoom Logistics have been effectively addressed. Additionally, ACWA Power’s solar plant tariff issues are now resolved, with a new Framework Agreement established.
Future Economic Outlook
Finally, the government has settled profits due up to Q1 – FY23 and anticipates business normalization by June 2024. Clearing Saudi company dues is a priority, with forex reserves increasing from $3 billion to $8 billion. Following the successful completion of the IMF program, exchange rates have stabilized, and efforts to enhance international arbitration and investment dispute resolution continue.
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