Saudi Crown Prince Mohammad bin Salman will make his maiden visit to Pakistan this week to ink several trade and investment deals worth more than $10 billion, diplomatic officials and local media reported, says Anadolu Agency.
The Saudi Foreign Ministry has not officially announced his schedule but Saudi Ambassador to Pakistan Nawaf Bin Saeed Al-Malki late last month told reporters bin Salman would arrive in Islamabad on February 16 for a two-day visit.
Private broadcaster Dawn News reported an unnamed Saudi Embassy official who said five trucks full of bin Salman’s personal amenities, including exercise equipment and furniture, reached Islamabad ahead of his visit.
Much of the focus of the visit is to sign a deal to establish an oil refinery in the southwestern strategic port city of Gwadar, a key route of the multibillion dollar China-Pakistan Economic Corridor (CPEC).
The agreement is part of a $10-billion planned Saudi investment in Pakistan which follows a $6-billion package announced by Riyadh in October to aid cash-strapped Islamabad.
According to Haroon Sharif, head of Pakistan’s Board of Investment, Riyadh is interested in Pakistan’s oil refinery, petrochemicals, renewable energy and mining sectors.
Last September, Pakistan formally invited Saudi Arabia to join the CPEC as a “third strategic partner,” however, a reported disagreement with China about the inclusion of a third partner in the mega project could not materialize the offer.
Nevertheless, Riyadh agreed to invest in CPEC-related projects. It has already announced financing of three CPEC projects in northwestern Khyber Pakhtunkhwa province and Pakistan-administered Kashmir.
The CPEC signed in 2014 seeks to connect China’s strategically important northwestern Xinxiang province to the port of Gwadar through a network of roads, railways and pipelines to transport cargo, oil and gas.
According to experts, Saudi Arabia is mostly exporting oil through its western ports on the Red Sea. Gwadar port will give the Kingdom another option.
They see the planned Saudi investment as a lifeline for Islamabad’s struggling economy compounded by a recent currency devaluation and declining foreign reserves.
“This investment will help Pakistan in two ways,” Karachi-based economist Muzzammil Aslam told Anadolu Agency. “First, it will bolster the country’s declining foreign reserves, and secondly, it will bring Islamabad to a better position with respect to its talks with the IMF [International Monetary Fund].”
Grappling with a colossal $18 billion current account deficit, Pakistan already sought the assistance of the IMF to deal with the exacerbating balance of payment issue.
Annual remittances of $20 billion from overseas are the major source of the country’s foreign reserves, which currently stands at $16 billion.
Aslam opined that the planned Saudi investment, which is “heavily capital intensive” would be unlikely to create a large number of jobs.
“A major chunk of the proposed investment will be disbursed on the oil refinery, which will benefit Riyadh more. However, Islamabad will continue to earn toll taxes on oil to be exported to China and Africa through Gwadar,” he said.