ECC clears revised financing: Reko Diq attracting new global interest

ISLAMABAD: The multi-billion-dollar Reko Diq project in Balochistan is reportedly attracting new international interest, with Japan showing a willingness to participate, sources told Business Recorder. This development was shared during a recent meeting of the Economic Coordination Committee (ECC) of the Cabinet, which approved financing for Phase-1 of the Reko Diq project. The revised cost has increased by 14 percent, from USD6.765 billion to USD7.723 billion. However, the Petroleum Division must seek fresh ECC approval in case of any deviation from the approved financing arrangements.

According to the summary presented to the ECC, inputs were sought from the Finance Division, Ministry of Law & Justice, Attorney General’s Office, State Bank of Pakistan (SBP), and the Government of Balochistan. As advised by the Finance Division, the Federal Board of Revenue (FBR) was also consulted — particularly on Clause 2.2 (Tax Gross-up) of the draft government of Pakistan Guarantee Deed. All stakeholders except FBR had responded. FBR may share its input during follow-USD3.5 billion in financing. The focus areas include health, safety, environment, and community welfare. The financing is being directly arranged by lenders and creditors, according to the Division.

Barrick Gold’s representative emphasized the project’s strategic importance and shared details on the financial close of the USD3.5 billion component. It was revealed that the equity portion of $900 million is split equally — 50 percent funded by sponsors, and the remaining 50 percent by financiers. State-Owned Enterprises (SOEs) are expected to repatriate funds through PMPL over seven years to meet their $2.145 billion commitment, either as equity or shareholders’ loans. In response to a query, the ECC was informed that some Japanese entities have expressed interest in participating in the project. The Finance Division supported the proposal, confirming that no dollar-denominated remittance would be required. It is, however, unclear which Japanese entities have shown interest in the project.

ECC approves key agreements to pave way for Reko Diq project

Two types of guarantees are associated with the project: (i) a sovereign guarantee from the Government of Pakistan (a completion guarantee), and (ii) a guarantee from the Asian Development Bank (ADB) covering MMRL equity.

The ECC noted that the SBP had yet to respond to certain points raised by the Petroleum Division. It directed the Division to engage with FBR, the Attorney General’s Office, and the Law Division to address taxation-related issues and prevent future complications.

Finance Minister and ECC Chair Senator Muhammad Aurangzeb acknowledged the project’s transformative potential for Balochistan’s economy and its broader benefits for Pakistan.

The ECC formally approved the revised estimate for Phase-1 and directed the Petroleum Division to continue consultations with the Attorney General’s Office, Ministry of Law and Justice, Finance Division, and the SBP. If any material changes arise, the case must be resubmitted to the ECC for further approval.

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