Khalid Saifullah :
The 14th joint commission meeting of Bangladesh-Saudi Arabia will be held in Riyadh from 30 to 31st next month. These two countries are expected to discuss export of petroleum and manpower, increasing the export of manufactured products, religiously permitted food products-especially fish and meat, and export of processed agricultural products and fertilizers. Saudi Arabia has some bilateral trade investment agreements with Bangladesh which is yet to come true i.e. developing a 3,600-megawatt LNG-based power plant and construction of 100MW solar IPP. Bangladesh will urge the Kingdom to implement the deals signed at different times between these two countries.
Petro Bangla and Aramco, the countries’ two state-owned gas production companies would sign a new deal for LNG export. Bangladesh is expecting a minimization of its energy crisis with this agreement. Meanwhile, Saudi Arabian state-owned Oil Company Aramco has shown interest in the construction, operation and maintenance of an oil refinery, which is expected to cost between $1.5 billion and $2 billion.
Moreover, the second Unit of Bangladesh’s Eastern Refinery Ltd has sought Saudi aid to process 3 million tons of crude petroleum every day. Bangladesh is expected to get approximately 68000 tons of petroleum every day, once the agreement is implemented. Power Development Board of Bangladesh and the ACWA power of Saudi Arabia will sign an agreement. ACWA Power has submitted an expression of interest to invest about $600 million to build a 730 MW combined cycle power plant in Chattogram. The development of the renewable power sector of Bangladesh is expected to advance a lot with this agreement.
Bangladesh has many opportunities to strengthen trade and investment relationships. `20 companies’ from Saudi Arabia have expressed their interest to invest in Bangladesh’, said Bangladesh foreign minister AK Abdul Momen following a meeting with Saudi delegates. Dhaka is ready to provide any kind of facilities’ he added. Saudi Arabia is interested to invest billions of dollars in Bangladesh in awide range of sectors, including oil refinery, power, infrastructure projects and food industries. Recently the Saudi envoy to Bangladesh addressed that his country is going to sign several Memorandum of Understandings on defense and security cooperation in a bid to strengthen the military ties.
Currently, Bangladesh’s energy sector is experiencing challenges as a part of global fuel shortage and price hikes. The Covid pandemic and then the Russia-Ukraine war have kept all energy prices very high for a long time. This unprecedented long period of high energy prices and supply shortage are exerting tremendous pressure on the country’s economy. Fuel prices surged approximately 51 percent in Bangladesh. While govt has cut electricity production and increased load shedding period to save fuel consumption, civil and political uprisings are being seen all over the country.
To resolve the current energy crisis, Bangladesh requires implementation of the promised investment of Saudi Arabia, the world’s largest petroleum exporting country. Two countries signed some agreements at various times to invest in Bangladesh’s energy sector. Despite fund confirmation, some projects stuck in the pipeline for a couple of years. Furthermore, Bangladesh has some mutual trade development agreements with Saudi Arabia. At last on March 15 of this year, the Saudi foreign minister Prince Faysal Bin Farhan Al Saud visited Bangladesh and has shown interest in investing more than $10 billion in15 large- and small-scale projects. Bangladesh will get 10b Dollars inthe current FYonce the investment will start to get into Bangladesh. In 2019, Bangladesh signed two agreements and four MoUs with Saudi Arabia to get investment in the power and energy sector. The signed deals included an agreement on construction of 100MW solar IPP; an agreement on manufacturing transformer and electricity devices. In November last year, The Saudi Company Engineering Dimension II LLC has committed to channel in about $1.685 billion in seven projects.
However, Saudi Arabia is one of the closest development partners of Bangladesh. As a Muslim-majority country, Bangladesh shares common social norms and cultural values derived from the birthplace of Islam. Widening economic, investment and defense cooperation can play a crucial role in taking the ties to a new height. The oil-rich country is continuing to diversify a number of sectors as a part of its ambitious Vision 2030. Being one of the fastest-growing economies of the world, Bangladesh has become a financial and industrial hub of South Asia. For its growing prospects and favorable geographical position, Bangladesh would be a lucrative investment destination for Saudi Arabia. Also Bangladesh is a major source of manpower for Saudi Arabia, as 2.6 million Bangladeshi workers are working in various sectors. Funding on manpower development in Bangladesh would make sourcing of skilled workers easier. Therefore, early implementation of these agreements could pave the path towards new opportunities for both countries.
Moreover, both countries have a long history of bilateral trade and investment relationships and have vast scope to expand. Currently, Saudi Arabia is funding Bangladesh’s four ongoing infrastructure projects, including Tk 3.45 billion SFD-funded Construction of 3rd Shitalakhya Bridge, $30 million-funded burn and plastic surgery units at five government medical colleges, and the establishment of secondary schools in upazila sadar region project. Both of them have opportunity to be benefitted economically through reinforcing their strong trade relationships. Speedy support from the country would lessen, especially the ongoing energy and fuel outages in Bangladesh. To accelerate implementation, authorities who are involved should carefully handle the process. Bangladesh govt. should emphasize negotiation with Saudi authorities for speedy implementation of investment agreements.
(The writer is an independent researcher).
