Friday, July 14, 2023
Just two days after Pakistan secured final approval to borrow $3 billion from the International Monetary Fund (IMF), the crisis-hit country’s request to buy liquefied natural gas received a response from a supplier for the first time in more than one year.
Last month, Pakistan failed to secure LNG from the spot market in its first attempt in about a year, as no supplier seems to budge to the cash-strapped nation's offer.
Traders, on the condition of anonymity, had said that Pakistan LNG Limited's (PLL) bid to purchase six shipments for October to December closed with no companies responding to the offer, Bloomberg had reported.
As per the latest update, Trafigura Group offered two LNG shipments for January to February delivery, said traders privy to the matter.
According to the media outlet, the move comes as Pakistan’s government finances are on the mend. The nation won final approval to borrow $3 billion from the IMF earlier this week, unlocking long-awaited lending that will help ease its dire need for cash.
The shipments that Trafigura offered are priced at roughly a 30% premium to current market prices, according to traders. Typically, spot purchases of fuel would be sold at similar levels to market prices.
Pakistan won’t award the tender until July 31, and it still isn’t clear if the country will follow through with buying the fuel. Credit risk had been a barrier stopping LNG suppliers from selling spot shipments to the nation.
The IMF deposited $1.2 billion into the State Bank of Pakistan's (SBP) account yesterday, boosting the cash-strapped nation's hope for economic stability, as it teetered on the brink of default for several months.
The global lender's executive board approved a $3 billion Stand-By Agreement (SBA) under a nine-month programme. Pakistan reached a staff-level agreement with the lender last month, securing a short-term pact, which got more than expected funding for the crises-hit country of 230 million.
Finance Minister Ishaq Dar had said, "Our foreign exchange reserves will close at around $13-$14 billion on July 14 [...] and the SBP will release the exact numbers later on."