KARACHI: In a bid to enhance energy growth and achieve a sustainable GDP growth rate of at least 5 percent, Pakistan is set to enter into a comprehensive energy agreement with Central Asian countries, including Russia.
This announcement was made by Minister of State for Petroleum, Dr Musadik Malik, during the inaugural ceremony of a direct containerised shipping service between Karachi and Saint Petersburg, held at a local hotel.
Dr Malik emphasised the significance of the comprehensive energy security agreement, which is expected to be presented to the public by the end of this year.
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He stated that to meet the energy requirements of Pakistan’s growing population, a consistent annual growth rate of 7.5-10 percent in the energy sector is needed to support a GDP growth of 5 percent. This comprehensive energy agreement aims to facilitate this growth.
While the details of the agreement were not disclosed, Dr Malik revealed that a substantial investment of $ 10 billion in the refinery sector is imminent in Pakistan. Prime Minister Shehbaz Sharif will inaugurate this significant investment, the specifics of which are currently confidential.
Furthermore, Dr Malik highlighted the government’s intention to leverage its historic ties with the Gulf Cooperation Council (GCC) countries to foster trade and commerce. Pakistan aims to fulfill its energy needs, including liquefied natural gas (LNG) and petroleum products, through collaboration with the GCC countries. The government also plans to establish energy corridors with Central Asia and the GCC nations.
Describing the purchase of crude oil from Russia as a transformative moment for Pakistan, Dr Malik emphasised the potential of cheap energy to stimulate industrial proliferation in the country. He expressed the government’s intention to establish small industrial areas in rural regions to promote value addition and manufacturing.
Dr Malik further emphasised the country’s infrastructure, labor force, and technological capabilities, aiming to position Pakistan as an attractive destination for industries seeking affordability and skilled resources.
The government is also focusing on curbing oil smuggling from Iran by enhancing enforcement in border areas.
Dr Malik stated that these measures will significantly reduce the flow of smuggled oil in the coming days.
Additionally, Pakistan is actively working towards strengthening trade relations with the United States and other Western countries to acquire assistance in green energy for green fertilizer production. Currently, one percent of gas is allocated for fertilizer production, and Pakistan seeks green energy solutions from the West to repurpose this resource for industrial needs.
Khurram Dastgir Khan, Federal Minister for Power, acknowledged the improving relations between Pakistan and Russia, noting a significant increase in bilateral trade. He mentioned that discussions for a free trade agreement (FTA) between the two countries began in 2004, with Russia proposing the FTA in June 2017. The trade complementarity index suggested that Pakistan is well-positioned to supply the Russian market, indicating potential benefits for the Pakistani export industry.
Khan stated that Pakistan aims to establish a comprehensive FTA with Russia to reduce tariffs, attract investments, and increase bilateral trade to a target of US 20 billion dollars annually in the coming years.
Andrey Viktorovich Fedorov, the Consul General of Russia in Karachi, expressed his mission to strengthen trade relations with Pakistan and lauded this initiative as a means to expand trade between the two countries.
Abdullah Farooq, CEO of Pak Shaheen Pvt Ltd, emphasised the positive impact of the direct shipping link between Karachi and St Petersburg. This connection will unlock untapped trade potential, facilitating the export of various Pakistani products, including fruits, vegetables, rice, textiles, sports goods, and leather. The service is expected to expedite trade activities and mark a new chapter in the economic relations between Pakistan and Russia.
The launch of the direct containerised shipping service witnessed the presence of numerous diplomats, bureaucrats, and other prominent figures, signifying the importance of the occasion, he added.
Copyright Business Recorder, 2023
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