Islamabad, 14 March 2022 (TDI): Pakistan and Saudi Arabia are set to finalize a deal where the latter will provide the country with an oil supply worth $1.2 billion over a three-year period on a deferred payment system.
The first oil tanker is set to arrive in Pakistan at the end of March. The Prime Minister of Pakistan, Imran Khan visited Saudi Arabia in October 2021 where preliminary talks about the deal took place.
The meeting decided that an agreement be reached at the earliest so that Pakistan could receive a continuous oil supply. Under this facility, Pak Arab Refinery Limited (PARCO) and National Refinery Limited (NRL) will import petroleum products.
The products will be worth up to $100 million per month from Saudi Arabia amidst rising oil prices around the world. At the same time, Saudi Arabia also made a $3 billion deposit for Pakistan.
Additionally, the Saudi Fund for Development (SFD) also announced that it would finance the construction of several energy products in Pakistan including the Mohmand Dam Project, Gravity Flow Water Scheme Manshera, and Jagran-IV Hydropower Project.
Shaukat Tareen, the Finance Minister of Pakistan informed the senate early last month that Pakistan would start using the Saudi oil facility. He added that the timeframe for the Saudi Financial Support is one year and an extension could be requested if Pakistan required one.
Although the interest rate on the loan has increased from 3.25% to 4%, Shaukat Tareen noted that the new rate was better with respect to the changing interest rate environment, the interest rate was the best option as compared to other lenders.
Both sides also discussed bilateral economic projects largely related to oil facilities, ongoing development projects, and future development projects. Saudi Arabia also pledged to take on a bigger role in the socio-economic development of Pakistan.
The Saudi Fund for Development (SFD) is currently providing assistance to 13 projects throughout Pakistan which includes areas such as energy, education, health, and infrastructure.
