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Government has managed with China for the revival of Saindak project on lease basis by MCC

From SHAMIM AHMED RIZVI, 
Islamabad
Mar 18 - 24, 2002

The economy of Balochistan province, hitherto a neglected area in our priorities, is going to receive two major boosts with Chinese help during the current month. One of the Chinese Vice Premiers, Wu Bangguo will perform the ground breaking ceremony of - Gawadar deep sea port on March 23, 2002. Besides the Saindak copper gold project closed for the last over six years will resume operation by almost the same time.

The Multi billion rupees Saindak project in Chaghi district complete in every respect which was standing idle since 1995 is poised to go in production during the next 2 weeks under the control of MCC of China to whom the project has been leased out. The Saindak complex, which is in good condition, consists of 50 Mw power plant built by Germany and France, bulk water supply system of 32,000 tonnes of daily drinking water, water treatment plant, warehouse, workshops, laboratories, storage, airport and railroad link with ECO (Previous RCD) highway. Moreover, the complex has modern housing township with schools, hospitals, shopping plazas, streets, street lights and network of water pipeline for more than 2,000 residents.

During trial production in 1995, Saindak produced more than 1,500 tonnes of blister copper containing substantial gold and silver. In the international market, it fetched more than Rs.140 million in foreign exchange. Besides bringing in royalty of Rs.3.5 million for the government. But then in the early 1996, the Saindak project completed at a cost of Rs.17 billion by MCC of China and SML of Pakistan, was shut down for want of working capital of Rs.1.5 billion. Now, present Musharraf's government has managed with China for the revival of Saindak project on lease basis by MCC. A source in the Ministry of Petroleum and Natural Resources told this correspondent that the latest study shows that the country currently imports about 30,000 tonnes of copper for meeting its defence and development requirements. With the working of Saindak project, Pakistan would be producing 45,000 tonnes of copper, 1.5 tonnes of gold, 2.8 tonnes of silver, 85,000 tonnes of pyrite and 62,000 tonnes of magnetic concentrates. Besides meeting domestic requirements, the remaining stock of produce and by-products would be exported abroad, earning a substantial sum of foreign exchange.

It may be recalled that its discovery in the 70s was followed by a big effort, in collaboration with a Chinese engineering firm, aimed at exploiting the treasures of the precious metals laid deep down the barren mountains of Balochistan. However, though launched with great enthusiasm, it ran into serious snags during the long years of Zia era which had remained visibly dotted with impediments in many an economic initiative of the preceding political governments. Later, breaking the chain of numerous uncertainties in the way of implementation of the project, a number of measures were introduced to ensure resumption of the stalled activity from time to time.

This multi billion rupee copper gold and silver project is a classic example of how government indecision, political expediency and bureaucratic wrangling can harm a reasonably promising public sector enterprises. This Rs.17 billion project was standing idle for want of funds to meet its initial cost of operations. The project started its trial operations in 1995 and its monthly productions 1,700 tonnes of copper, 6,000 oz of gold, 12,000 oz of silver for the four months that it was in operation. But after successful trial production the plant had to halt production because of the government's failure to meet the project's initial cost despite the fact that a commitment to this end had been given earlier.

It was on repeated representations and protests of Balochistan government that former Prime Minister Nawaz Sharif agreed to visit the site. It was in the last week of September 97 when the former Prime Minister along with Finance Minister, Governor and Balochistan Chief Minister, visited the multi billion rupee estate of Saindak lying dead due to sheer neglect, mismanagement and corruption of the bureaucratic set-up. During this visit, the then Managing Director of the project, Maj Gen (Rtd) Muhammad Yaqub Bezenjo, while briefing the prime minister about the project had said that a sum of only Rs.1,500 million was required for running it on commercial basis.

The Ministry of Finance negotiated with Bank of America, and ABN Amro who agreed to provide a loan of Rs.15,000 million as working capital against guarantees of government of Pakistan. In addition government provided about Rs.600 million out of its own resources to complete the pending work, construction and provision of infrastructure to make it ready for commissioning. The two banks, however, backed out of their commitment because of the post blast economic sanctions on Pakistan throwing the project once again in the doldrums.

The matter came under discussion when the Chief Executive, Gen. Pervez Musharraf, who appeared keen to initiate some development work in the neglected and the backward Balochistan, held a cabinet meeting in Quetta. The provincial government complained to the Chief Executive that nothing had been done by successive federal government during the last 10 years for the development of their province and cited the example of Saindak and Pak-Iran Oil refinery — two development projects earlier but could not take off because of the casual attitude of the government and the bureaucratic rigmarole.

The present government must be complimented for the prompt action in this regard. A committee was set up early last year which recommended that project may be privatised as it appeared next to impossible to run it in public sector in view of the past expenses. luckily the Chinese contractors who had been involved in the project since its inception offered to take it over. They also offered to build a refining on site so that the cost of finished goods comes down.

The offer was accepted and formal agreement was signed when President Musharraf visited Beijing a few months back. Immediately after the Chinese exports and technocrats, and technicians arrived at the site and are now working almost round the clock to make the project operative by March 23, to coincide with the inauguration of Gawadar Port by Chinese Vice Premier.