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Business Recorder
15-05-2025
- Business
- Business Recorder
Minister informs NA: Reko Diq project to generate over $75bn in free cash flows
ISLAMABAD: Federal Minister for Energy (Petroleum Division) Ali Pervaiz Malik said that Reko Diq Project will be the largest Western investment in Pakistan and is forecasted to generate more than $75 billion in free cash flows over the current life of mine plan which is nearly 37 years. In written reply to a question to the National Assembly on Thursday, the minister said that total volume and estimated value of Reko Diq (RD) is; Phase-I production starting 2028: Targeting 300,000 oz/annum of gold and 200,000 tons/annum of copper. He said that Phase-2 production is starting 2034: 500,000 oz/annum of gold and 400,000 tons/annum of copper. He said that these numbers are based on real cash flows, which are conservative. He said the nominal free-cash flows assuming a standard commodity price escalation may yield to more than $100 billion of cash flows. Barrick's Reko Diq project in Pakistan aims new financing The minister said that project structure with 25 per cent share of Balochistan besides taxes and royalty provisions, ensures that a significant share of the economic benefits of the project will flow to Pakistan, with the majority of those amounts paid to the Government of Balochistan. He said the key fiscal terms for the project include (among others) are: - five per cent royalty payable to the Government of Balochistan, one per cent net smelter return payable to the Government of Pakistan. He said that 0.5 per cent export processing zone surcharge. To ensure that Balochistan is receiving benefits during the development and construction phases, the minister said that advance royalty payments to the Government of Balochistan were made by the Project Company in year 1 ($5 million) and year 2 ($7.5 million) and will be made in year 3 and thereafter until commercial production ($10 million per year), for a maximum total amount of advance payments of $50 million. The minister said that according to the bankable Feasibility Report, the key development phases are: Phase-1 construction: 2025 – 2028, Phase-1 Production: 2028, Phase-2 construction: 2028 – 2033, Phase-2 production: 2034 He said that adequate measures and steps have been ensured and taken for environmental safeguards, community development and employment opportunities besides local business opportunities. He said that $5.3 million has been spent in education, health, skills training, and clean water access since 2022. He said that construction phase: one per cent of all construction capital (estimated at approximately $57 million for Phase 1 and $33 million for Phase 2 based on the updated feasibility study); $10 million has already been paid toward this commitment in advance to Government of Balochistan. About the operating phase of the project, the minister said that 0.4 per cent of annual revenue during every fiscal year commercial production estimated at approximately $25 million per year. He said that major local employment: 7,500 jobs during peak construction; 4,000 jobs in the long term. Currently, 77 per cent of RDMC employees are from Balochistan. He said that various steps taken to ensure maximum possible benefit to the people of Balochistan include royalty at five per cent of revenue (net smelter revenue) goes to the Government of Balochistan. He said that an advance royalty arrangement has been made, providing total of $50 million until production commences in 2028, after which regular royalty payments will begin. The minister said that 75 per cent of employees in the project are from Balochistan. 4,000+ long term jobs and 7,500+ people during peak construction will be employed. He said Reko Diq Mining Company (RDMC) is governed by a board chaired by the chief secretary of Balochistan, with the secretary Mines and Minerals as a member, alongside representatives from federal state-owned enterprises (SOEs) and Barrick. The board meets quarterly to oversee project progress and ensure transparency, he said.
Business Recorder
15-05-2025
- Business
- Business Recorder
Gwadar development: Senate panel calls for concrete steps
ISLAMABAD: Senator Quratulain Marri stressed that basic need such as water supply must be prioritised over tourism in Gwadar. 'A master plan is not just about tourism; it must first ensure the welfare of local residents.' Presiding the Senate Standing Committee on Planning, Development and Special Initiatives, to review key development initiatives, project delays, and progress under the Public Sector Development Programme (PSDP) 2024–25, here on Thursday, Senator Marri asked for a clear strategy on how proposed investments would yield tangible incentives for development in the region. The secretary Ministry of Communications briefed the committee, on the Sukkur Karachi Motorway project and ongoing negotiations with the Government of Azerbaijan. He noted that discussions have also been initiated with the Islamic Development Bank (IsDB) with expectations that the bank will fund Section IV (Naushehro Feroz Ranipur) and Section V (Ranipur Sukkur), and also that there is anticipation to obtain board approval by September 2025. The chairperson, Senator Quratulain Marri, suggested that the project must not face delays beyond September 2025 and called for a detailed list of deliverables along with monthly progress reports to be shared with the committee. On the Hunza-Khunjerab Road, officials informed that 11 damaged sections have been identified, and repair work is underway. The committee also received a briefing on inspection report by Monitoring Wing, Ministry of Planning, Development and Special Initiatives on inspection of dam and update on projects of dam construction in Balochistan till date. After reviewing inconsistencies in progress, Senator Marri recommended summoning representatives from WAPDA and the Monitoring and Evaluation team in the next meeting to individually review each dam project and determine causes of delay. In a detailed discussion on the Gwadar Master Plan, the committee reviewed fund allocations, disbursements, and investment strategies. The chairperson committee expressed concern over the delay in the Safe City Project and highlighted a discrepancy: while the Gwadar Development Authority cited reason of lack of funds, the Finance Division confirmed no funding demand was received from the Government of Balochistan. She urged for formal demand procedures to be followed. Senator Manzoor Ahmed raised concerns regarding the protection of small fishermen's rights and questioned the steps taken by the Government of Balochistan in this regard. Senator Marri endorsed his concerns and directed the CPEC Chief Officer, Balochistan, to follow up. Moreover, officials from the Gwadar Development Authority denied the presence of a tanker mafia. Senator Marri expressed that a comprehensive report in July would help clarify the ground realities. The committee was also informed that port charges at Pakistani seaports, particularly Gwadar, and Port Qasim are higher than at any other port in the region. Senator Marri questioned the justification for these higher charges. Officials clarified that the fees are imposed by Customs and the Gwadar Port Authority. The Committee noted that despite Gwadar's strategic importance offering China a reduced maritime route of 2,000 nautical miles compared to the current 10,000 via Xinjiang it remains underutilised. In 2009, 70 ships docked at Gwadar Port, while in 2024, only four arrived. Officials further pointed out that despite being developed after Gwadar, Chabahar Port in Iran is now fully operational, whereas Gwadar remains non-functional. The committee also reviewed fourth quarter PSDP 2024–25 fund utilisation. The secretary Ministry of Planning, Development and Special Initiatives (MoPD&SI), stated that total authorisation stands at Rs1,002.46 billion, with the challenge now being full utilisation by 30 June 2025. While reviewing ministry-wise performance, Senator Marri expressed concern over low expenditures: only seven per cent utilised by the Finance Division, four per cent by Maritime Affairs, and 0 per cent by the Religious Affairs and Interfaith Harmony Division. She recommended that detailed fund utilization reports be shared with respective Senate Standing Committees for further review. The meeting was attended by senators, Saadia Abbasi, Shahadat Awan, Jam Saifullah Khan, and Manzoor Ahmed, along with secretaries from the Planning and Communications ministries, chairman NHA, and senior officials from relevant departments. Copyright Business Recorder, 2025
