The Ministry of Energy in Saudi Arabia has raised concerns regarding the necessity of a new agreement for the development of renewable energy (RE) projects.
The Ministry of Energy in Saudi Arabia has raised concerns regarding the necessity of a new agreement for the development of renewable energy (RE) projects, citing the existence of a Memorandum of Understanding (MoU) between the two countries. Sources within the Ministry of Foreign Affairs (MoFA) informed Business Recorder about these developments.
Pakistan’s Mission in Riyadh forwarded a draft agreement to the Saudi Ministry of Energy for consideration and feedback. However, during informal discussions, Saudi officials highlighted that Saudi Arabia had previously signed an “MoU on Development of Renewable Energy (RE) Projects” with Pakistan during the Saudi Crown Prince’s visit to Islamabad in 2019.
Questioning the need for a new agreement, Saudi officials informed Pakistan Embassy staff that technical experts within their Ministry are currently reviewing both drafts for comparison, and they will provide an official response accordingly.
In response to Saudi Arabia’s initial stance, Pakistan’s Mission in Riyadh has offered comments and suggestions after comparing the 2019 MoU with the draft “G2G Framework Agreement on Cooperation in the energy sector.” These include:
- Asserting that the 2019 MoU serves as a framework agreement allowing for the development of renewable energy projects by ACWA and other Saudi investors, as stated in clause 2 of Article 3.
- Considering the possibility of amending the 2019 MoU to include references to Pakistan’s “Inter-Governmental Commercial Transaction Act 2022” if deemed necessary.
- Noting that clause 3 of Article 10 of the 2019 MoU provides a basis for making amendments, while Article 4 allows for the formation of a joint team to monitor implementation.
- Suggesting that specifics mentioned in the draft agreement could be addressed in a commercial agreement, as they pertain to financing matters beyond the scope of the Saudi Energy Ministry.
The Ministry of Foreign Affairs stated that Pakistan’s Mission is seeking views and comments from the SIFC and the Ministry of Energy to determine a way forward in addressing the reservations expressed by the Saudi side.
In light of these developments, it remains to be seen how both parties will reconcile their differences and proceed with cooperation in the energy sector.