Renewable energy projects: Saudi ministry raises questions over ‘need for new pact’

ISLAMABAD: Saudi Arabia’s Ministry of Energy is said to have raised questions on the need for new agreement on development of renewable energy projects in the presence of existing a Memorandum of Understanding (MoU), well-informed sources in Ministry of Foreign Affairs (MoFA) told Business Recorder.

Sharing the details, sources said Pakistan’s Mission in Riyadh had forwarded a copy of the draft agreement to the Saudi Ministry of Energy for their consideration/comments.

Subse-quently, during informal discussions, relevant officials of the Saudi Ministry told Pakistan Embassy staff that Saudi Arabia had already signed “MoU on Development of Renewable Energy Projects” with Pakistan (during the visit of the Saudi Crown Prince to Islamabad in 2019).

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They have, therefore, questioned the need for signing a new agreement on cooperation in energy sector. They, however, told that the technical experts in their Ministry are reviewing both drafts for comparison, and will share their official response accordingly.

Keeping in view the initial response of Saudi side, Pakistan Mission in Riyadh has conveyed the following comments/suggestions after comparing the two texts of the existing 2019 MoU and the draft “G2G Framework Agreement on Cooperation in energy sector: (i) in spirit and substance, the 2019 MoU is also a framework agreement, which allows for renewable energy projects to be developed by ACWA/other Saudi investors; (ii) clause 2 of Article 3 of the 2019 MoU states that the “Renewable Energy Projects shall be carried out, as intended in this MoU, in accordance with the methods permitted under the national laws, rules, regulations and policies of Pakistan, in relation to renewable energy projects”. This clause provides an overarching framework to develop projects within the legal framework of Pakistan.

However, in case it is important for us to refer to Pakistan’s “Inter-Governmental Comm-ercial Transaction Act 2022” in the framework agreement, Pakistan could also look into the possibility of amending the 2019 MoU to include its reference in clause 2 of Article 3; (iii) Clause 3 of Article 10 of the 2019 MoU provides basis for making amendments; (iv) Article 4 of the 2019 MoU allows for formation of a joint team (if necessary) to monitor the implementation of the MoU.

Such a joint team would be affiliated with the joint steering committee of the economic pillar of the Saudi Pakistan Supreme Coordination Council, which is jointly led by Saudi Energy Ministry and Pakistan’s Ministry of Finance; (v) specifics mentioned in the Article 3 of the recently shared draft agreement could be part of the commercial agreement since some of the points mentioned in the text pertain to financing, which would be beyond the mandate of Saudi Energy Ministry.

According to Ministry of Foreign Affairs, Pakistan Mission has sought views/comments of the SIFC and Ministry of Energy way forward to address the above reservations of the Saudi side.

Copyright Business Recorder, 2024