PSO to import petrol from Saudi Arabia on deferred payment
Aftab Ahmed
Islamabad: Prime Minister Imran Khan is set to seek import of petrol by Pakistan State Oil (PSO) on deferred payment to ease pressure on foreign exchange.
The price of Petrol in Pakistan today fluctuates due to its oil import.
The monthly requirement for petrol is around 0.7 million metric tons. Earlier, Pakistan has been importing crude oil on deferred payment from Saudi Arabia to meet the requirement of oil refineries.
Now, Pakistan will import petrol from Saudi Arabia on deferred payment to ease the burden on foreign exchange reserves. Premier will formally ask Crown Prince to approve this facility.
Prime Minister Imran Khan will request the Crown Prince of Saudi Arabia to extend bailout package including import of crude oil as the balance of payment support for next financial year.
Moreover, Pakistan needs $25 billion amount to US$25 billion, of which about US$17 billion is amortizations to multilateral and bilateral official and commercial creditors/
Furthermore, Saudi Arabia had announced a total package of $12 billion for Pakistan in October 2018 for two years. Saudi Arabia committed $6 billion in support for each year.
Out of a total of $12 billion, Saudi Arabia had made a commitment of $3 billion to Pakistan as the balance of payment support for one year and supply of $9 billion worth of oil on deferred payment for three years.
Pakistan had availed oil deferred payment facility for one year as Saudi Arabia discontinued it for the second year due to cold relations between the two countries. However, Saudi Arabia wanted to supply petrol but Pakistan did not import it under the facility.
Officials said that ministry of finance had prepared two proposals for the upcoming visit of Prime Minister Imran Khan to Saudi Arabia.
Finance Ministry had asked Prime Minister to take up the matter of financing agreement for the import of Saudi goods which included petroleum products between the Saudi Fund for Development (SFD) and Pakistan.
The ministry had asked the further premier to take up a memorandum of understanding (MoU) on the balance of payment with the Crown prince.
Funding Requirement
The PTI government has informed International Monetary Fund (IMF) that the gross external financing needs for the next 12 months (April 2021-March 2022) will amount to US$25 billion, of which about US$17 billion is amortization to multilateral and bilateral official and commercial creditors.
The PTI government has secured a US$10.8 billion loan from China in 2021 for retiring international financing commitment in the next 12 months.
To close this gap, we have secured financing commitments from bilateral and multilateral partners: China US$10.8 billion, UAE US$2 billion, the World Bank US$2.8 billion, the Asian Development Bank US$1.1 billion, and the Islamic Development Bank US$1 billion, Pakistani side said.
Crucially, key bilateral creditors have maintained their exposure to Pakistan in line with program financing commitments. We have secured adequate long-term financing from our international partners to support our economic reform program. The current projections suggest that with the policies, the Pakistani government said. Pakistan also needs support to import petrol along with diesel to meet country requirements.
In addition, the Pakistani side said that it had benefitted from the temporary suspension of debt service to official bilateral creditors provided under the G20 DSSI initiative, which covered US$2.5 billion falling due over May 2020-June 2021 (of which US$0.8 billion related to the second round of DSSI covering January-June 2021 debt service). Moreover, good prospects remain for the remainder of the program.
