A record investment package being prepared by Saudi Arabia for Pakistan will likely provide welcome relief for its cash-strapped Islamic ally, while also addressing regional geopolitical challenges, according to analysts.
At the heart of the investment is a reported 10 billion dollar 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 confirmed that heir apparent to the Gulf kingdom’s throne, Crown Prince Mohammed bin Salman, will visit Islamabad shortly, without giving a date. 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 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 the Pakistani Prime Minister, Mr. Imran Khan, some 30 billion dollars in investment and loans.
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.
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 dollars 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 dollars in oil imports payments as Islamabad has so far failed to secure fresh loans from the International Monetary Fund. Mr. 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.
Mr. Khan also visited Saudi rivals Qatar and Turkey, as well as China seeking investments. 'One of the goals for Saudi expanding investments in refining worldwide is to secure market share and sustainable exports in the face of international competition,' Mr. Bouenain said.
The Saudi Energy Minister, Mr. Khalid al-Falih, visited Gwadar in January and inspected the site for the proposed oil refinery at the deep sea port, just 70 km away from its Iranian competitor, Chabahar. He was quoted by media as saying the kingdom was studying plans to construct a 10 billion dollars refinery and petrochemicals complex in Gwadar.