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Pakistan ‘faces $11.43b damages claims’ in Reko Diq mining case
By Shahbaz Rana
Published: January 19, 2018

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ISLAMABAD: The Public Accounts Committee (PAC) has observed that Pakistan faces $11.43 billion damages claims in Reko Diq mining case in international courts due to corrupt practices and inefficiencies of successive governments of Balochistan.

The PAC on Thursday also raised serious questions over the manner in which the provincial governments allowed change of ownership from one Australian company to two others from 1998 to 2006 despite the fact that there was no such clause in the original Chagai Hills Joint Venture Exploration Agreement (Chejva).

The parliament’s accountability watchdog took a detailed, but in-camera, briefing from Balochistan’s Mines and Minerals Development Department and the additional attorney general.

Senate chief authorised: Six senators to be included in Public Accounts Committee

The committee decided to hear experts like Dr Samar Mubarakmand, a scientist, and Ahmer Bilal Sufi, an expert in the international law, in its February 6 meeting, before giving a ruling on the matter.

“The Thursday’s proceedings made it clear that successive Balochistan governments mishandled the case, apparently due to corrupt practices and inefficiencies,” said a member of the PAC on condition of anonymity.

In 2012, the Tethyan Copper Company (TCC) filed claims for international arbitration before International Court for Settlement of Investment Disputes (ICSID) of the World Bank after the provincial government turned down a leasing request from the company.

Reko Diq gold mine project: Pakistan may face $11.5-billion penalty

In the ICSID proceedings, the jurisdiction and liability have been decided against Pakistan, as the tribunal has found that Pakistan has breached the Bilateral Investment Treaty of 1998 between Pakistan and Australia, the secretary mines of the Balochistan government informed the PAC.

He is said to have told the PAC that according to the ICSID, the Supreme Court’s decision to declare the mother joint venture agreement illegal did not diminish the TCC’s Investment. According to the provincial government, even malpractices and corruption by the TCC did not deny it investment rights.

Now the ICSID proceedings are in the quantum stage where the TCC has claimed a figure of $11.431 billion. The claim is supported with a number of expert reports and financial models, the PAC was informed. The TCC expects a ruling on the quantum of damages in 2018.

Reko Diq case: Pakistan rejects $11.5b damages claim

The PAC was told that the Office of the Attorney General for Pakistan was vigorously defending this ‘outlandish claim’ of $11.34 billion through its International Arbitration Unit.

Reko Diq is part of the Tethyan Magmatic Arc, which is a mineralised belt that originates from Eastern Europe and runs through Iran, Afghanistan and turns upward towards Pakistan.

But the PAC found serious lapses on the part of successive provincial governments, starting from 1994, said another PAC member. He said PAC Chairman Khursheed Shah questioned whether the 1994 joint venture agreement allowed change of venture partner.

He did not get a satisfactory answer. From 1998 to 2006, the 75% foreign interest in the mining project was transferred from original firm to two other firms. Senator Mushahid Hussain observed that corruption and inefficiencies should be blamed for the current state of affairs.

Reko Diq — Pakistan’s Achilles’ heel?

In 2013, the Supreme Court declared that Chejva and all of its successor agreements were void ab initio and that the TCC had no legal rights to explore and mine in Reko Diq. As of March 2017, Pakistan has incurred $15.5 million expenses on international arbitrations while the TCCA’s expenses are estimated at $39.2 million.

Three exploration phases

In 1990, Australian based Broken Hill Proprietary (BHP) showed interest in the gold and copper mines. The BHP was entitled to earn 75% interest in the joint venture. In 1998, BHP suspended its exploratory work and handed over its obligations to another Australian company, Mincor Resources, that took over the work in 2000.

The Balochistan government and the BHP made an addendum to the original joint venture agreement, which radically reduced BHP’s financing obligations. Under this arrangement, the Balochistan government was entitled to earn 25%, if it invested 25% in the Mine Development Project.

Balochistan signals readiness for settlement of Reko Diq row

The PAC was told that under the phase-II, the Mincor Resources incorporated Tethyan Copper Company in Australia (TCCA) as special purpose vehicle for the project. Then the TCCA incorporated the Tethyan Coper Company Pakistan (TCCP) as its 100% subsidiary in 2000. The Mincor also registered the TCCA on the Australian Stock Exchange.

The phase three began in 2006 when Mincor sought to sell its share on the stock exchange to other mining companies and the TCCA was acquired by the Antofagasta and Barrick Gold in 2006 for an amount of $240 million.

The then provincial government approved the TCCA acquisition by Antofagasta and the Barrick Gold.

In 2007, the TCCA started a process with provincial and federal governments for customised mineral agreement for undertaking mine development. According to a TCCA 2010 feasibility study, 256,000 ounces of gold and 420 million pounds of copper were to be produced over a period of 56 years.

The ore was to be crushed, converted into slurry, to be transported through a pipeline from Reko Diq to Gwadar and from there to foreign smelters and refineries owned by the TCCA.

The estimated capital outlay of the project was $3.3 billion and the provincial government was to get 25% of the profit against its 25% investment. But Balochistan rejected the mining lease application on November 15, 2011.

The major stumbling blocks were that the smelting and refining should be done in Pakistan. The royalty rates should be enhanced, financial model should be reviewed and there should be more participation of the locals in the project.

https://tribune.com.pk/story/1612383/1-pakistan-faces-11-43b-damages-claims-reko-diq-mining-case/

When you guys are going to take action against this b@stard? @The Eagle @waz
 
http://www.thehindu.com/todays-pape...-borrowing-to-rs-20000-cr/article22459489.ece

Review of receipts

“Upon a review of trends of revenue receipts and expenditure pattern, it has been assessed that additional borrowing of only Rs. 20,000 crore of government securities would be adequate to meet financing needs,” the Finance Ministry said in a statement on Wednesday.

The government had on December 27, 2017, said that it would raise additional market borrowing of Rs. 50,000 crore through dated government securities in the current financial year 2017-18. “This is a very unexpected move, since the government’s indirect tax collections have been falling short of projections,” a noted economist said on condition of anonymity. “Direct tax collections have grown faster, but I don’t think that is enough to make up the shortfall. It is not clear where the government has found the additional revenue. Maybe it is from the dividend paid by the RBI.”
 
KARACHI: The State Bank of Pakistan (SBP) reported on Thursday its foreign exchange reserves amounted to $13.69 billion on Jan 12, down $2.45bn from $16.14bn at the end of June 2017.

This is precisely what happens when you don't allow implementation of policies made by civilian governments and either weaken them, or damage the projects they have to uplift the economy of any nation. We see this behavior from Pakistan to Africa. Nowhere else, not even in Nepal or Bangladesh. Pakistan, with its modern 2017 infrastructure getting in place, is still headed towards 2012 financial crisis. Primarily, due to the back-end stabbing by its political parties who don't allow government's to finish their term and finish economic policy. Sadly, many educated fools would spend days here justifying bullshit. When the only justification is in FX and GDP number! I've read a few policies from 3 years ago, the debt was initially high due to building new infrastructure which costs money. But starting 2018, the debt was going to go down as various projects would come online and would start to pay for their part of the debt, relieving Pakistan's FX from that responsibility and then additional payments from the FX would be made to reduce it faster. With the political instability in place, I don't think there is a remote possibility of a country making any progress while going through daily civil disturbance, shutting down billions of businesses, trade traffic, shops and markets due to political sit-ins and all. Very sad indeed. Never seen people damage their own country's growth and plunge it due to their personal benefits!
 
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