The $9 billion Reko Diq Deal is the most significant investment in Pakistan’s history. By making a matching investment, the country gets 50 percent of the profit from the overall project. There are other classifications of Pakistan’s 50 percent share. The Government of Pakistan is not a direct investor, as state-owned enterprises, including OGDCL, Pakistan Petroleum Company, and Government Private Holding Company Limited, are investing in the project. Balochistan will get half the profit of Pakistan’s share.
Apart from foreign direct investment (FDI), the investment company will generate 7,000 jobs and spend 0.4 percent of the project’s proceeds on the province’s social development, Barrick Gold Company counsel Makhdoom Ali Khan said in an argument before the Supreme Court hearing. Presidential message. They will also develop local infrastructure in the province. The Additional Attorney General told the Supreme Court (SC), “Failure to meet the requirements of the Reko Diq agreement will lead Pakistan’s economy to Failure as a penalty of $10 billion is to be paid while the country’s foreign exchange reserves are much lower. International investment company Barrick Gold has agreed to close the Reko Diq deal under certain conditions. The condition includes court validation of the agreement, proper legislation in both the national and provincial assemblies regarding foreign investment, and the protection of exemptions granted to foreign investors.
The SC is hearing a presidential reference on the Reko Diq project in which the President of Pakistan sought an opinion under Article 186 of the Constitution of Pakistan. The President referred to two questions of law sent on October 15, 2022, SC — (1) whether the Government of Balochistan or the Government of Pakistan can enter into an international agreement under the judgment of the Supreme Court in the case of Molvi Abdul Haq Vs. Federation of Pakistan, 2013, and (2) whether the proposed Foreign Investment (Protection and Promotion) Bill, 2022, would be constitutional.
Reko Diq is Pakistan’s largest gold and copper reserve:
In the early 1990s, Pakistan’s largest gold and copper deposit were discovered at Reko Diq in the Chaghai district of Balochistan. Two world-class international mining companies – Barrick Gold Company and Antofagasta – entered into a joint venture agreement with the governments of Baluchistan and Pakistan in July 1993. The multinational companies spent US$240 million on mineral exploration and feasibility studies until 2011. The feasibility studies identified gold and copper reserves at the commercial level in Reko Diq.
What is the verdict of Supreme Court Molvi Abdul Haq Vs.? Federation of Pakistan?
Today’s Reko Diq Project Agreement was formerly the Chaghai Hill Exploration CHEJVA Joint Venture Agreement. In 2011, Barrick Gold and Antofagasta Company applied for an extension of their mining lease from the Ministry of Mines and Mineral Development in Balochistan. The ministry rejected their request, after which the two companies entered into a lawsuit against the governments of Pakistan and Balochistan in two separate international forums based on the $240 million they spent on exploration. The government of Pakistan faced a claim for specific performance in extending the lease at the International Center for Settlement of Investment Disputes (ICSID). In contrast, the government of Balochistan had to face the case at the International Court of Arbitration (ICC). ICSID ruled in the case against Pakistan, thus meeting all the demands of the investor companies.
On January 7, 2013, the KS declared CHEJVA illegal, null and void. The Supervisory Committee decided there was a severe violation of basic legal requirements and a lack of due diligence in the Reko Diq Project. The investment companies again filed a claim against Pakistan at ICSID, whose tribunal in 2019 announced a $6.927 billion award against Pakistan for breaching the agreement. The ICC has also ruled against Pakistan, but the award is yet to be announced. Legal experts believe that the cost of the ICC against Pakistan will be around $3 billion.
New Reko Diq Agreement and Responsibility to Pakistan:
Pakistan has successfully negotiated a new agreement with Barrick Gold Company in March 2022 for the Reko Diq project, but the final deal will be signed after due diligence. Pakistan has a stay till December 15. By signing the agreement, Reko Diq will be released from liability of $10 billion. A foreign company, Antofagasta, previously involved in the deal, left after paying the $900 million owed to Pakistan. According to the new agreement, Pakistan will have a 50 percent stake by investing $4.5 billion in the total $9 billion project. If the said agreement is not fulfilled by December 15, Pakistan will be required to pay $10 billion.
The federal government is yet to pass legislation, namely the Foreign Investment (Protection and Promotion) Bill, 2022, which will be a one-stop operation for all foreign investment in the country, according to the government counsel in the SC. The law, as mentioned above, will be adopted after the Supreme Court gives its opinion on its constitutionality.
Additional Attorney General Aamir Rehman told the court that this law would apply to investments of $500 million and above after prior approval by the federal government. As of November 28, the oversight committee had held 16 hearings on the presidential reference. A five-judge larger bench headed by Chief Justice of Pakistan Umar Ata Bandial is hearing the matter. “We want to settle the hearing of the reference by December 1, and we will be able to announce the brief opinion in the second week of December,” the CJP said in the 15th hearing of the reference. Based on the opinion of the SC, the National and Provincial Assemblies will enact the Foreign Investment Law, and the Reko Diq Agreement will be signed in due course.
