Pakistan has so far imported petroleum products worth $100 million on a deferred payment basis under the Saudi oil facility. Pakistan had signed an agreement worth $1.2 billion with Saudi Arabia for the import of petroleum products on November 29, 2021.
According to the government sources, the brotherly country has started to provide petroleum products to Pakistan under the agreement. Saudi Arabia provided petroleum products worth $100 million during March 2022.
Pakistan will import a total of 32.7 million barrels of crude oil and petroleum products during the year under the agreement signed with the Saudi Fund for Development (SFD) to meet its needs for petroleum products on a deferred payment basis.
The Pak-Arab Refinery Company Limited (PARCO) and National Refinery Limited (NRL) will import 16.89 and 15.81 million barrels of oil in the year 2022 respectively.
Under the agreement, petroleum products worth $100 million can be imported from Saudi Arabia on a deferred payment basis every month for a period of one year. The facility can be extended for a period of one year. Under the agreement, the repayment of the original amount plus the interest rate of 3.8 percent would be made in one annual installment in US Dollars.
It is pertinent to mention here that Pakistan’s forex reserves have been depleting alarmingly in recent weeks. The reserves held by the State Bank of Pakistan are only sufficient for an import bill of two months. According to the IMF, a country like Pakistan should have forex reserves equal to an import bill of four months.
The facility will help the government which is currently struggling to build forex reserves at a sustainable level to control the rupee devaluation against the US Dollar and to make timely foreign payments.