Saudi Investment Highlights Opportunities
BMI View: In line with stronger Pakistani and Saudi relations, coupled with the latter's eastward economic push, one of Saudi's largest construction companies, Al-Qarnain Group , has pledged a US$1bn five year infrastructure investment in Pakistan. The deal poses great potential for a struggling Pakistani construction sector, and likely a sizeable profit for Al-Qarnain. However, we highlight that the agreement's success rate is seemingly correlated to broader political ties between the two countries.
Saudi Arabia's Al-Qarnain Group recently announced plans to invest up to US$1bn in Pakistan over the next five years, according to the company's CEO Eyad Al-Baaj. The investment would be targeted towards Pakistan's deteriorating construction and infrastructure fleet, with an initial investment of US$400mn in the first phase, increasing it to US$1bn within five years. The 'package' also includes a joint venture with Pakistani cement company Dandore, which will reportedly significantly boost production capacity from 350 metric tonnes per day to 7,500 metric tonnes.
Furthermore, to address Pakistan's significant energy shortfall the firm is also looking to first construct an independent power plant with a production capacity of 150-200MW, as well as production of solar panels, installation and back up services. Pakistan currently largely relies on highly volatile hydropower, costly imports of oil and domestic production of gas for electricity generation. Yet poor infrastructure and insufficient supply has led to persistent power cuts and increasing demand shortages.
|A Costly Composition|
|Pakistan Total Net Generation, By Type (%)|