ISLAMABAD: Prime Minister, Shehbaz Sharif has assigned Finance Minister Senator Ishaq Dar the responsibility to resolve the issues being faced by the Saudi Fund for Development (SFD) with respect to funding of $ 1.6 billion, as Saudi Arabia is unhappy with the Economic Affairs Division for its ‘inappropriate’ attitude, well-informed sources told Business Recorder.
Saudi Arabia is dispatching a SFD team on October 17-22, 2022 with preconditions of resolution of issues related to taxes and delay in finalization of loan agreements.
Islamabad is expecting a scheduled visit of Saudi Prime Minister/ Crown Prince, Muhammad Bin Salman next month, probably on the eve of the changing of the guard in Pakistan Army. The government is already preparing its wish list to be shared with Saudi Arabia, with the hope of getting a positive response from Riyadh.
Prime Minister’s SAPM, Syed Tariq Fatemi, sources said, has informed Secretary to Prime Minister that Pakistan’s Ambassador in Riyadh had a meeting on September 27, with Dr. Saud Ayid, DG (Asia Operations) of SFD. During the meeting, Dr. Ayid gave an overview of their projects across Pakistan with a total outlay of around $1.6 billion ($1.2 billion loans and $ 400 million grants).
According to the details shared with Pakistani ambassador, out of the total funds, around $550 million ($500 million loans and $50 million grants) were still not allocated to any project due to delays in response from Pakistani side.
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The sources said that SFD was facing some obstacles in executing 4-5 grant funded projects in Balochistan due to issues related to coordination with Economic Affairs Division (EAD) and agencies nominated by Pakistan.
The King Salman Hospital in Tarlai, Islamabad (a grant funded project of around $26 million) was facing delays due to the failure of PWD as the executing agency. The EAD had proposed to transfer the project from PWD to FWO.
The sources maintained that loan agreement for Mohmand Dam Hydro Power Project worth $250 million was near finalization, pending approval from Pakistan side. In addition, so far, the SFD had not received any response from Pakistan side on Jamshoro Power Generation, Jagran-IV Hydro Power, Shounter Hydro Power, Mansehra Water Supply, and Abbottabad-Muzaffarabad Road projects.
Saudi Arabia has requested a final word from the Pakistan side: to consider these projects or otherwise.
Dr Ayid also expressed dissatisfaction over the modus operandi of coordination between EAD and SFD, and highlighted the following major challenges being faced by SFD in Pakistan: (i) even after receiving assurances from the Ministry of Finance, the taxation issue was still not resolved. This was seen by the SFD as a breach of the signed loan agreements; and (ii) lack of any dedicated team at the EAD designated for SFD projects.
On Pakistan Mission’s suggestion for allocating of new funds for flood rehabilitation projects in Pakistan, Dr Ayid was requested that a detailed list of projects may be submitted to SFD at the earliest. It was also proposed to send an SFD team to Pakistan but with the condition that taxation issues must be resolved, a dedicated team needs to be organized at the EAD for SFD projects and a verification mechanism will be needed to oversee identification and implementation of the flood rehabilitation projects.
Director General Ayid also recommended that during the SFD team visit, the Loan Agreement for Mohmand Dam Hydro Power Project may be finalized, and stressed the need for finalizing the projects for unassigned funds of $550 million at the earliest.
The main agenda of the visiting SFD team will be to hold comprehensive discussions with Ministry of Planning on flood rehabilitation projects. However, the team also intends to finalize pending Loan Agreements of hydropower projects, resolve taxation issue and hold discussions with EAD for timely execution of SFD projects.
SAPM, sources further stated, maintains that with the visit of the Crown Prince of Saudi Arabia scheduled for November, it is imperative that relevant authorities are directed to hold constructive and meaningful engagement with SFD team, and resolve their pending issues, especially with EAD and FBR to give a positive signal.
Copyright Business Recorder, 2022
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