Pakistan sets up public exploration company in Balochistan with 10% shares for center

Construction work taking place in the port of Gwadar, Balochsitan, in the southernmost tip of Pakistan, on Oct. 4, 2017. (AP/File)

• Balochistan Mineral Exploration Company will be formally registered this month, main objective is to attract private investment and boost government revenue
• Mining is a provincial subject in Pakistan, many stakeholders are opposed to federal government being involved in Balochistan’s affairs

ISLAMABAD: Pakistan has established a public limited company to expedite mineral exploration in the southwestern Balochistan province, top government officials said on Thursday, a move that is likely to meet resistance from locals who have long resented the central government’s interventions in the resource-rich province.
Federal and provincial authorities approved the Balochistan Mineral Exploration Company Limited (BMEC) in June. About 90 percent shares of the company will be owned by the Balochistan government and 10 percent by the center.
“The company will be formally registered with the Securities and Exchange Commission of Pakistan this month, and then the remaining formalities like staff appointments will also be completed,” Syed Zafar Ali Bukhari, Balochistan’s secretary for mines and mineral development, told Arab News.
He said the company’s main objective was to bring in domestic and foreign investment from private mineral exploration companies, create jobs and boost provincial government revenue.
Balochistan, a sparsely populated, mountainous, desert region bordering Afghanistan and Iran, has for years been plagued by an insurgency that has sometimes waned and sometimes intensified over the years.
Some indigenous Baloch people accuse the central government of exploiting the province’s vast natural resources and unfairly distributing them among other provinces — one of the reasons that fueled a separatist insurgency around 2004. The government denies it has committed any wrongs.
Sajid Qazi, who works as a joint secretary with the petroleum division, told Arab News the federal government’s 10 percent share was “for a facilitation role, which is not barred by the Constitution of Pakistan 1973.” In Pakistan, mining is a provincial subject.
“The structure, ownership and stewardship of BMEC is a reflection of national consensus on development of Balochistan’s mineral sector,” he added.
Qazi said an apex committee had been designated to take strategic decisions and provide direction to the company as well as resolve deadlocks. It would include the prime minister, chief minister of Balochistan and the army chief and federal advisers and ministers for finance and planning.
Many stakeholders in Balochistan are opposed to the federal government being involved in the province’s affairs.
“Mines and minerals constitute a provincial subject and the federal government shouldn’t intervene in it by keeping shares in the public company,” Sardar Shoukat Popalzai, President Balochistan Economic Forum, told Arab News.
He questioned why a separate public sector minerals exploration company needed to be formed when a mines and minerals development department already existed in the province. “The creation of the company is nothing but duplication and will only lead to bureaucratic wrangling,” he said.
Popalzai suggested that the federal and provincial governments only provide “security to firms and implement relevant rules and regulations” to boost mineral exploration in the province.
“This is the job of the private sector and the government should let it do it with freedom,” he said. “A number of provincial government projects related to mineral exploration are stalled because the officials involved neither have the expertise nor the capacity to fully exploit their true potential.”
Mineral exploration in Balochistan, Pakistan’s largest province in terms of its geographical size, has remained controversial over the years since multinational companies, including Canada’s Barrick Gold and Chile’s Antofagasta, went into litigation against the government over the famous Reko Diq copper deposit in the province.
The company formed a joint venture that claimed to have invested more than $220 million in the Reko Diq project by the time the Balochistan government in 2011 refused to grant it the mining lease for further operations. In 2013, the Supreme Court of Pakistan also voided the deal, but in 2017 the World Bank’s International Center for Settlement of Investment Disputes ruled against the country.
The Reko Diq dispute is yet to be settled formally as the firms are claiming more than $11 billion in damages.
To offset the controversies and bring in new local and foreign investors, the Balochistan government announced its first mineral policy in August last year to “help win the confidence” of investors in the province’s mineral sector.
“Balochistan is rich in natural resources, but investors are reluctant to come here due to lack of an effective mineral policy,” Chief Minister Balochistan Jam Kamal Khan said while introducing the policy.
The director-general mines and minerals department of Balochistan, Abdullah Shahwani, said that the government could not enter into businesses directly and thus had to establish a public sector company to negotiate with private investors and facilitate them in the mining sector.
“The mining sector is a potential source of job creation and revenue collection for the government. Therefore, we want to expand it with the help of private investors,” Shahwani told Arab News.
He said the security situation in the province would be a major concern for private investors, but added: “We can’t stop working due to security threats. We have to take care of them.”