ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved a mark up payment of Rs6.238 billion on a short-term finance facility of Rs65 billion by the Finance Division from March 31, 2022, to December 30, 2022, for the Reko Diq project dispute settlement.
The meeting of the ECC presided over by Finance Minister Ishaq Dar was presented a summary by the Ministry of Energy that following 12 July 2019 award against the government of Pakistan by the Arbitral Tribunal of the International Centre for Settlement of Investment Disputes and in favour of M/s Tethyan Copper Company (Pvt) Limited, Australia (TCCA), the prime minister was constituted an apex committee in August 2019 which after multi-round, prolonged and extensive negotiations and deliberations between the Apex Committee and TCCA’s shareholders, framework of settlement and revival of the Reko-Diq Project was arrived at in March 2022.
The terms and conditions of the settlement, the ECC was told were that; (a) development of the Reko Diq copper-gold mineral resources under a reconstituted Reko Diq Project by a joint venture comprising - Barrick Gold Corporation (50 percent shareholding, GoB 25 per cent shareholding and PPL, OGDCL and Government GHPL, collectively holding 25 per cent share in the project.
Barrick Gold starts work on Reko Diq project
And payment of US$ 900.00 million along with interest payable at an annual rate equal to the US Prime Rate plus two percentage points compounded on monthly basis for the period from 1 July 2022 till 15 December 2022 to Antofagasta as consideration for the acquisition of its shares in the Reko Diq Project by SOEs and government of Balochistan (GoB).
The proposed settlement was ratified by the ECC and approved by the cabinet in March 2022 and as per the approved mechanism government of Pakistan (GOP) will provide the requisite share of funding on behalf of GoB through market financing, raised against the GHPL balance sheet in rupee terms backed by GoP guarantee, to be issued by Finance Division with approval of ECC of the Cabinet.
The ECC was informed that the short-term facility has expired on December 30, 2022 and the NBP has given notice for repayment of principal amount along with mark up payment and approached the Finance Division for renewal of this facility.
Accordingly, the Finance Division through GHPL arranged the Short-Term Finance facility of Rs65 billion from the National Bank of Pakistan on the balance sheet of GHPL with the GoP’s guarantee for funding of GoB’s share of US$ 137.5 million.
Since the final settlement proceedings were underway, the interest amount became due and as approved by the ECC and ratified by the federal cabinet an amount of US$ 12.716,368 for GoB’ s share towards interest payable to Antofagasta for the period up to December 15, 2022, was deposited in the designated Escrow Account from the said loan of Rs65 billion.
The ECC considered and approved a summary of the Ministry of Energy (Petroleum Division) regarding arrangement of Finance Facility for funding of Government of Balochistan’s share of obligation in Reko Diq project dispute settlement with directions to the Finance Division to arrange payment of mark-up amounting to Rs6,238,358,879 for the period from March 31, 2022, to December 30, 2022, to the NBP for the short term finance facility of Rs65 billion.
Copyright Business Recorder, 2023
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