If we heard him right CM Balochistan is looking for local business groups to invest, something like $3 billion at first blush, in Reko Diq copper and gold mines.

If we didn't know the CM to be an honest and well-meaning straight shooter, in whose veins flows the blood of two former Chief Ministers of Balochistan, we could easily read into his call despondency or simple mindedness – or duplicitous manoeuvring.

It could be despondency if foreign investors have not shown much of an appetite for this controversial project, despite the attractiveness of the opportunity that lies buried under the sands of Chaghai. We don't know if he concluded this after reaching out to potential foreign investors -only to come back empty-handed.

It could also be that he would rather have local business houses reap the riches of Reko Diq (RD) than the exploitative foreign hit men. That would be simple minded. Pakistani enterprises were never denied the opportunity to explore and obtain a mining lease, with or without foreign collaboration. If they chose not to, for reasons of capital intensity or lack of expertise, why would they now respond to the Chief Minister's appeal?

We suspect there is more to it than meets the eye. Is the invitation to local investors a ploy – to pave the ground for something else?

To recall, Tetheyan Copper Company (owned equally by Barrack Gold of Canada and Antofagasta of Chile) got a favourable verdict from the International Centre for Settlement of Investment Disputes (ICSID). Pakistan is now required to pay to TCC ‘damages' of about $ 6 billion, plus interest from the date of verdict (reportedly $22 million a month!).

Pakistan has decided to follow a twin track strategy. First, the Attorney General rushed to Washington to file a review application before ICSID, seeking annulment of the award to TCC. Second, the RD Commission formed by the Prime Minister is scheduled to meet TCC Board in London next week, ostensibly to come to some kind of ‘settlement'.

The Pakistan team to London, headed by Federal government, will include Chief Minister and Chief Secretary Balochistan and other top guns, besides representatives of the agencies.

The chances of our review (annulment pleadings) succeeding are close to non-existent. We had put up a hopelessly flawed defence in the earlier ICSID proceedings, as a close reading of the award amplifies. We will have to produce new grounds for the review. We have no idea what these new grounds can be. We have already used up technical objections, plus corruption allegations, without getting much joy.

The London meeting with the TCC Board, apparently at our request, leaves us a little mystified. What can we offer them for them to give up their $6 billion award? Yes, they know getting an award is one thing and getting it executed quite another: we don't have the money and they are not in the business of getting our assets abroad attached. But they know what a pyrrhic victory connotes and will never shut the negotiating window, no matter how creaky.

The Pakistan team, as high level as you can get, can only offer one or more of the following options towards an out-of-court settlement (we are pretty sure TCC will be mainly doing the listening; they have no reason to show their cards, much less make an offer, in this first meeting).

We could ask them to settle for a lower amount. TCC might be receptive to it – something is better than nothing – but how low can they go? Three billion? They might if Pakistan can guarantee immediate payment. Can we dish out even this amount? It is a non-starter.

A lower amount, say $3 billion, payable in instalments spread out over five years or so? TCC might be amenable but will most certainly seek water-tight guarantees, and insist on interest payments. Because Pakistan can't offer the kind of guarantees that would satisfy TCC this option also has weak chances of realization.

Finally, Pakistan could invite them back. Give them the mining lease, on the terms they had always wanted, and declare victory: “we have undone the past mistakes; managed to get a major FDI into the country; and ensured that the people of Balochistan get the benefits of their resources".

This is where the suspicion of duplicitousness canters in: invitation to local investors being no more than a manoeuvre to offer the concession back to TCC. Everyone knows the domestic business houses do not have what it takes for a project this size and complexity. “We tried but there were no takers from within the country. What alternatives were we left with? We can't allow this rich resource to stay buried".

The problem is would TCC bite? How would they explain to their shareholders that they gave up $6 billion, or even three, only to get back to from where they were kicked out? Let's not forget the project life is 52 years. A lot can happen between now and then, or even in the interregnum if the strategy is to skim as much as fast.

Let's also bear in mind when TTC first went to ICSID it had prayed for ‘performance', i.e., grant of mining lease that had been denied to them. They quickly altered it to ‘compensation'. Now having got a favourable award would it be realistic to expect them to make a U-turn?

Reko Diq has become a noose around our neck. Domestic investment is not likely to rush in, our annulment case is weak (otherwise we wouldn't be requesting the meeting with TCC Board), and prospects of a good ‘settlement' quite remote. Will the Balochistan bonanza remain where it is – under the earth?

The outside chance is to interest a strong international player to get the mining rights, perhaps on soft terms, leaving it to them to negotiate a settlement with the TCC. If it is a credible player TCC would rather take their chances with him than with GoP.

The real lesson of the TCC saga is when you when play big league, involving billions, you need to have the skills to match theirs. There should be no shame in accepting our weaknesses. We need to hire services of international experts – financial, technical, legal -when negotiating mega-projects.

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Copyright Business Recorder, 2019