EDITORIAL: The counsel for Barrick Gold plainly informed the Supreme Court that if by 15 December 2022 the agreement is not signed with the Balochistan government Pakistan would have to pay 9 billion dollars. Chief Justice Bandial observed: “tell the court about transparency of the Reko Diq agreement instead of scaring the court.”
A feasibility study for the Reko Diq project was completed in 2010, 12 years ago, and by 15 February the next year, submitted an application to the Balochistan government for a mining lease which was rejected on 15 November the same year; and Barrick Gold launched two international arbitrations – one with the World Bank’s International Centre for the Settlement of Investment Disputes which ruled in favour of Barrick Gold and the company was awarded 5.8 billion dollars in damages.
However, the company expressed its willingness to reach a negotiated settlement in July 2019, an offer welcomed by the government, and an agreement was reached in March this year.
On 20 March 2022, the then Prime Minister, Imran Khan, congratulated the “nation and the people of Balochistan for the successful agreement with Barrick Gold for the development of Reko Diq mine after 10 years of legal battles and negotiations. Penalty of approximately 11 billion dollars is offset, 10 billion dollars will be invested in Balochistan, creating 8,000 new jobs. RD will potentially be the largest gold and copper mine in the world. It will liberate us from crippling debt and usher in a new era of development and prosperity.”
Barrick Gold issued the following statement the same day: “the process to finalise and approve definitive agreements, including stabilisation of the fiscal regime pursuant to the mineral agreement will be fully transparent and involve the federal and provincial governments, as well as the Supreme Court of Pakistan. If the definitive agreements are executed and conditions to closing are satisfied, the project will be reconstituted including the resolution of damages originally awarded.”
Thus the seal of approval by the apex court was considered necessary by Barrick Gold as many an agreement with international companies have been disrupted by court decisions (an example being the privatisation of Pakistan Steel Mills) or violated by subsequent governments and in this context one would appreciate the fact that the 11-party coalition government did not challenge the agreement, which led to the court’s observation that all parties seemed to be in favour of the agreement.
Former Finance Minister Shaukat Tarin in a press conference held in March revealed further details of the agreement: Barrick Gold would retain 50 percent of the shares while the rest of the shares will be divided between the federal and Balochistan government, the 25 percent federal share will be divided between Oil and Gas Development Company, Pakistan Petroleum Limited and Government Holdings Pakistan.
However a comment is merited on Chief Justice Bandial’s astute observation notably “don’t tell the court about mistakes of the economists we are suffering from.” There is no doubt that Pakistan over the past three decades slowly but inexorably become victim of sustained flawed economic policies that supported the elite of all sectors - agriculture, industry and wholesale/retail trades - while placing the onus of their elitist policies on the public; for example, taxes to this day remain largely indirect, a regressive form of taxes whose incidence on the poor is greater than on the rich, the power sector’s appallingly poor performance has translated into higher tariffs for the general public and last but not least the steady rise in current expenditure as opposed to development expenditure has accounted for lower growth rates than was projected.
And sadly, these policies continue to this day in spite of inaccurate claims that the coalition government is paying a heavy political price for taking difficult but necessary economic decisions.
The only difficult decision taken so far has been a reversal of the 28 February electricity relief package by the previous administration and that decision too was partly reversed on 28 May and partly on 3 June while the amendment to the National Accountability Ordinance that benefited key leaders of the coalition was passed on 27 May, a day earlier.
Copyright Business Recorder, 2022