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Islamabad seeks renewal of $3.2B Saudi oil deal, repays $1B early

Filed on August 8, 2020 | Last updated on August 8, 2020 at 09.40 pm
The $3.2 billion oil facility was part of a $6.2 billion Saudi package announced in November 2018 to ease Pakistan's external sector woes.

Agreement of over $3B cash support and oil facility per annum has provision of renewal for 2 more years

Pakistan has not received the oil on deferred payments from Saudi Arabia since May as a deal signed between the two sides for provision of $3.2 billion worth of the fuel under the arrangement expired two months ago.

However, Islamabad is still waiting for a response from Riyadh over its request to extend the facility. Petroleum division spokesperson Sajid Qazi said the agreement expired in May and efforts are being made by the division to renew the facility.

He said Pakistan is awaiting a response from the Saudi government over its request to further extend the facility.

The $3.2 billion Saudi oil facility was part of the $6.2 billion Saudi package announced in November 2018 to ease Pakistan's external sector woes, the Express Tribune reported.

The budget estimates suggested that the government was hoping to receive minimum $1 billion worth of oil in fiscal year 2020-21, which started in July.

Pakistan has already prematurely returned $1 billion of the Saudi loan - four months ahead of its repayment period, the report said. Citing sources, it said Pakistan could also return the remaining $2 billion cash loan, subject to availability of a similar facility from China.

The agreement of over $3 billion cash support and the $3.2 billion oil facility per annum had the provision of renewal for two more years.

Saudi Arabia had rolled over its $3 billion loan from between November 2019 and January 2020. The International Monetary Fund has termed the rollovers of Saudi, UAE and Chinese assistance as critical for Pakistan's debt sustainability.

The UAE had also announced a $6.2 billion package for Pakistan in December 2018, including a $3.2 billion oil facility.

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