Islamabad, March 19: Pakistan has decided to pay $ 900 million to a firm, Antofagasta — one of the companies engaged in the settlement of the Reko Diq dispute, reports The Express Tribune.
Pakistan was penalized with a fine of almost $6 billion by a global arbitration body in favour of the Tethyan Copper Company (TCC).
TCC was a joint venture between Chile’s Antofagasta and Canada’s Barrick Gold.
According to The Express Tribune report, the Pakistan Supreme Court in 2013 had blocked the TCC from developing Reko Diq — one of the world’s biggest untapped deposits of copper and gold.
The joint venture then took the matter into court and the International Centre for Settlement of Investment Disputes ordered the Pakistan government to pay $5.8 billion in damages.
Under the terms of the settlement, the government would pay Antofagasta a sum of $900 million- – the amount in lieu of the latter’s share of the award — $3.25 billion, reports The Express Tribune.
The Economic Coordination Committee (ECC) of the cabinet had considered the summary submitted by the Petroleum Division regarding “Settlement of the Reko Diq Dispute between Tethyan Copper Company Vs Islamic Republic of Pakistan” and approved the proposal.
Petroleum Division Secretary Ali Raza Bhutta had briefed the cabinet body about the case and informed that the attorney general for Pakistan (AGP) had negotiated terms of the settlement with both Antofagasta and Barrick Gold.
The terms were presented to the apex committee, which approved them. Conveying the decision of the apex committee to the Petroleum Division, the AGP Office advised to process the draft agreements for the approval of the ECC and the cabinet, reports The Express Tribune.
The Petroleum Division secretary had shared the terms of a settlement reached with Antofagasta and approved by the apex committee.
According to the terms of the settlement, the Pakistan government would give Antofagasta a standby letter of credit (SBLC) for the settlement amount by no later than March 31, 2022; provided, however, the funds shall not be released to the firm until the completion of all legal requirements.
According to the report, it requested the Finance Division to give $337.5 million to Antofagasta on behalf of the government of Balochistan. In return, the province, through the Balochistan Mineral Expo Company (BMEC), would receive a 15 per cent shareholding of the proposed project company in addition to 10 per cent carried shareholding with the payment mechanism suggested by the Finance Division.
It also suggested issuing the SBLC of $ 397 million in accordance with the arrangements. The apex committee might continue to oversee and guide the process of legislation and requisite legal proceedings to ensure that both are concluded by March 31, 2022 and in case the deadline is missed, positively by December 15, 2022, reports The Express Tribune.
While commenting further, the petroleum secretary said if the failure ?to complete the necessary legislation and requisite legal proceedings? persisted beyond December 15 2022, the entire deal would collapse.
The State Bank of Pakistan (SBP) governor had observed that the settlement may affect the foreign exchange reserves, therefore the payment mechanism should be deliberated with the central bank.
The ECC had also directed the Finance Division to consult the SBP and Federal Board of Revenue. (UNI)
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