- NEOM’s zero-carbon city, NESPAK’s new role, and investments enhance bilateral relations
For decades, Pakistan and Saudi Arabia have maintained strong defence, diplomatic, and trade ties, which were further strengthened two years ago with the establishment of the Saudi-Pakistan Supreme Coordination Council to provide strategic direction to their relationship. Saudi Arabia, home to over 2.7 million Pakistani expatriates, has been a key source of remittances and oil supply for Pakistan. The Kingdom has long been influential within the Muslim world, but under the leadership of Crown Prince and Prime Minister Mohammad bin Salman, its global standing has significantly risen. His ambitious reforms, aimed at fulfilling Vision 2030, are transforming Saudi Arabia’s socioeconomic landscape.
Located in northwestern Saudi Arabia, NEOM is central to Crown Prince Mohammed bin Salman’s Vision 2030, which seeks to diversify the country’s economy beyond oil dependency. One of its key projects, “The Line,” is a zero-carbon city stretching over 170 km, designed for a million residents in sustainable urban developments powered entirely by clean energy. NEOM’s broader vision includes a floating industrial complex, a global trade hub, luxury resorts, and a cutting-edge city powered by renewable energy sources.
NESPAK secures project in NEOM
National Engineering Services Pakistan (NESPAK), Pakistan’s leading engineering consultancy, has secured a $12.5 million project under the NEOM initiative. The project, awarded by the Saudi Electric Company (SEC), focuses on energy infrastructure. NESPAK will provide construction management services for Extra High Voltage (EHV), High Voltage (HV), and HVDC systems across NEOM’s zones, including NEOM Bay, NEOM Mountain, and NEOM Phase II. NESPAK, which has been active in Saudi Arabia since 1982, has previously secured 126 projects worth $22 billion in the Kingdom.
In 1982, the company established its regional office in Riyadh and initiated collaborations with various Saudi enterprises, both in terms of business acquisition and offering consultancy services in the Kingdom. According to its website, NESPAK has successfully secured 126 projects valued at $22 billion in Saudi Arabia.
State-of-the-art skill university
In addition to this, Saudi Arabia plans to establish a “state-of-the-art skill university” in Pakistan to meet the growing demand for a skilled workforce for projects like NEOM. The Ministry of Overseas Pakistanis and Human Resource Development is also working on securing a special quota for Pakistani skilled and semi-skilled workers for NEOM and other upcoming projects, reinforcing economic ties between the two nations.
Buna-Raast connectivity
Pakistan is the sixth-largest recipient of global remittances, with a remittances-to-GDP ratio exceeding 7%, amounting to approximately $31 billion annually. The majority of these remittances come from Saudi Arabia and the UAE, with the Arab region contributing over 58% of total inward remittances in FY24. The Buna-Raast integration aims to formalize and streamline these remittance flows between the Arab world and Pakistan, potentially redirecting $2 billion to formal channels. This initiative enhances regional financial connectivity, positioning Pakistan as a key player in financial transactions and economic growth. This substantial inflow is crucial in supporting Pakistan’s balance of payments and providing essential financial support to millions of households, playing a pivotal role in maintaining living standards and facilitating access to education and healthcare.
The majority of Pakistan’s remittances come from the Arab region, with Saudi Arabia and the United Arab Emirates (UAE) being the largest contributors. In FY24, approximately 58.5 per cent of total inward remittances came from Saudi Arabia, the UAE, and other Gulf Cooperation Council countries, making the Arab-Pakistan corridor the largest for remittances into Pakistan.
The Buna-Raast integration represents a pivotal step in formalising and streamlining remittance flows between the Arab region and Pakistan. By reducing costs and offering enhanced efficiency, this connectivity could encourage approximately $2 billion to switch to formal channels, positioning Pakistan as a hub for regional financial transactions and contributing to broader economic stability and growth.
Additionally, the Buna-Raast integration can create opportunities for Arab financial institutions to participate in Pakistan’s credit markets through data partnerships. Furthermore, expanding the network to include other countries can enable future opportunities for overseas Pakistanis to make direct payments for services in Pakistan, as well as extend local schemes, to the Arab region. This expansion could also open up new avenues for financial inclusion and economic growth.
Proposed 15% investment in Pakistan’s Reko Diq mining project
Saudi Arabia has proposed a 15% investment in Pakistan’s Reko Diq mining project, along with grants to develop road infrastructure around the site. Pakistan anticipates Saudi investments of up to $5 billion in the mining and agriculture sectors by June next year. A Saudi delegation visited Pakistan a few months ago to explore investment opportunities in solar, mining, hydropower, and technology. The Reko Diq project, located in Balochistan’s Chagai district, is expected to commence production by 2028. Barrick Gold Corporation holds a 50% share, while Pakistan’s federal government owns 25%, and the Balochistan provincial government holds the remaining stake. Saudi Arabia has been negotiating to acquire part of the Pakistani government’s share in the project.
Aramco to launch first branded gas station
Following its acquisition of a 40% stake in Gas & Oil Pakistan Ltd (GO) in May 2024, Saudi oil giant Aramco plans to open its first retail gas station in Pakistan by year-end.
GO is one of Pakistan’s largest retail and storage companies, involved in the procurement, storage, sales, and marketing of petroleum products and lubricants.
Aramco, a leading global energy and chemicals company, holds a 12.5% share in the world’s oil supply. Aramco’s acquisition of GO marked the company’s first downstream retail investment in Pakistan, signifying a major step in expanding its presence in high-potential markets.
In 2019, Pakistan and Saudi Arabia signed agreements for a $10 billion Aramco oil refinery and a $1 billion petrochemical complex in Gwadar. In recent months, Saudi Arabia reaffirmed its commitment to expedite a $5 billion investment package for Pakistan.