The Reko Diq mess
A report in Business Recordersays the government is in the process of striking a deal on the Reko Diq issue but the details are yet to be finalised. Advisor on Finance Dr Abdul Hafeez Shaikh and Attorney General of Pakistan Anwar Mansoor Khan have flown to London to meet the Tethyan Copper Company Board on October 14, 2019. The Attorney General refused to reveal anything about the development as he said the matter was confidential. It may be recalled that on October 22, 2019, Prime Minister Imran Khan while addressing the inauguration ceremony of the 1,320 megawatt power plant at Hub, Balochistan, had stated that during his visit to the US in September 2019, he had received a message that the Chairman of Barrick Gold, the Canadian company that is one of the partners in the Reko Diq joint venture with Chilean company Antafogasta, wanted a meeting with him, adding that the company was interested in resuming work on the project. The prime minister revealed that negotiations were underway to bring these companies back into the project. On July 13, 2019, the World Bank’s International Center for Settlement of Investment Disputes had imposed a $ 5.976 billion award against Pakistan in the Reko Diq case filed by Tethyan Copper Company, consisting of a $ 4.08 billion penalty and $ 1.87 billion interest. Tethyan Copper Company had filed the law suit in 2012 after the Reko Diq contract awarded to it was suspended. Then chief justice of Pakistan Iftikhar Mohammad Chaudhry had declared in 2011 the Chaghai Hills Exploration Joint Venture Agreement between the Balochistan Development Authority and Broken Hill Properties Minerals Intermediate Exploration Inc signed in 1993 as void ab initio. Broken Hill had before the verdict sold its interest in Reko Diq to the Tethyan Copper Company. The verdict has ended up costing Pakistan $ 5.976 billion.
Now the Pakistan Tehreek-i-Insaaf government of Imran Khan has chosen the pragmatic option of negotiating with the Tethyan Copper Company to find a way out of the mess. But it is troubling that the government’s negotiating team of Advisor Finance Dr Abdul Hafeez Shaikh and Attorney General Anwar Mansoor Khan has been so tight-lipped on the development. After all it was the lack of transparency (and the failure by the Centre to take Balochistan on board) that caused the debacle in the first place since the Supreme Court found the terms of the contract to be skewed against the interests of Pakistan. Now if Tethyan Copper Company’s Board is prepared to discuss and contemplate letting Pakistan off the penalty hook in return for being reinstated, with guarantees against a repeat of any breach of the fresh contract, this is obviously in Pakistan’s cash-strapped interest. However, given Balochistan’s sensitivities on this and other, earlier issues regarding the province’s mineral resources and their exploitation by the Centre (Sui gas being the most prominent case from the past), it is advisable that the Centre and Balochistan work in tandem on any new deal being struck with Tethyan Copper Company. Apparently, Pakistan demanded at one point that a copper refinery be set up as part of the project, an idea that failed to fly as the contracting company clearly indicated it was not in the refinery business. It boggles the mind that our side did not know that, and even after it was clarified, failed to approach other international companies for a refinery. Unlike the past, the Reko Diq project, Pakistan and its international investment partners would all be better served by maintaining transparency about the new terms of the project, which would also fulfil the requirement of the public’s right to know.
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