Source: https://www.tbsnews.com

The 14^th meeting of the Bangladesh-Saudi Arabia joint commission will be held in Riyadh from the 30 to the 31^st of October this year. These two Asian countries are expected to discuss the 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 yet to come true i.e. developing a 3,600-megawatt LNG-based power plant and construction of 100MW solar IPP. `Bangladesh will urge its counterpart to implement the deals signed at different times between these two countries, Tapan Kanti Ghosh, an official from Bangladesh’s Ministry of commerce said to a local newspaper.

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. The 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 a wide range of sectors, including an 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 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 the supply shortage is 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 the implementation of the promised investment of Saudi Arabia, the world’s largest petroleum exporting country. The 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. 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 in 15 large- and small-scale projects. Bangladesh will get 10b Dollars in the current FY once the investment will start to get into Bangladesh. In 2019, Bangladesh signed 2 agreements and 4 MoUs with Saudi Arabia to get investment in the power and energy sector. The signed deals included an agreement on the construction of 100MW solar IPP; an agreement on manufacturing transformers and electrical devices. In November last year, The Saudi Company Engineering Dimension II LLC committed to channeling in about $1.685 billion in seven projects.

However, Saudi Arabia is one of its closest development partners in 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 in the world, Bangladesh has become a financial and industrial hub of South Asia. Of its growth 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 for manpower development in Bangladesh would make sourcing skilled workers easier. Therefore, early implementation of these agreements could pave the path toward 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 the 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 the opportunity to be benefitted economically by 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.

About the author

Khalid SAIFULLAH

is a freelance writer and researcher on South Asian politics, economy, and security with a M.S.S. from the University of Dhaka, Bangladesh.