Friday Oct 01, 2021
JHELUM: Federal Minister for Finance Shaukat Tarin said Friday Saudi Arabia has agreed to provide oil on deferred payment to Pakistan, a day after the government hiked the price of petroleum products up to Rs8.82.
The finance minister, addressing a ceremony, said Saudi Arabia would provide $150 million to Pakistan on a monthly basis, and in two years, Riyadh would provide a facility of $3.60 billion to Islamabad.
"This amount will be utilised to procure oil," the finance minister said.
Back in May, Federal Minister for Information Fawad Chaudhry had said Saudi Arabia had agreed, in principle, to revive the facility of oil supply to Pakistan on deferred payments.
The prime minister, on his visit to the kingdom earlier this year, had made a request to Saudi Arabia to resume the supply of oil to Pakistan on deferred payments for an extended period.
"Yes, it's almost done," Chaudhry had said.
Earlier, Saudi Arabia had provided a $6 billion financial package, including $3 billion deposits into the State Bank of Pakistan, and the remaining $3 billion for oil facility on deferred payment on an annual basis.
The previous oil facility from KSA was signed for three years during the visit of Saudi Crown Prince Mohammad Bin Salman to Pakistan. This facility was made operational from July 2019 with the understanding that the first-year bill would be paid on monthly basis and then second-year oil would be obtained on deferred payment.
So, this whole facility would end in the fourth year upon the maturity of getting oil for the third year. It was assessed at that time that Pakistan would require a $275 million oil facility on monthly basis from the KSA, so it accounted for $3.2 billion on a per annum basis for a three-year period.
Such facility was agreed upon for three years with the possibility of rollover of second and then the third year. Both sides had agreed that this facility would be provided through the IDB’s Islamic Trade Finance Facility (ITFC). It is not known how much Pakistan had availed of the SOF in its first year, but then this facility got suspended.