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Pakistan to get Saudi oil on deferred payments

ISLAMABAD - Saudi Arabia is likely to approve this month the export of 1,10,000 barrelx of oil to Pakistan on deferred payments aimed at reducing the country’s growing external financial liabilities.

“As soon the Saudi King arrives in Ryiadh from Casablanca where he is vacationing, he would sign the facility agreed between us last month,” a senior government official told this correspondent.

When negotiated in July, oil price was $145 per barrel and the facility was calculated to be worth $5.8 billion. Since then the price dropped to $112 per barrel.

“Now the real amount is likely to be recalculated keeping in view the downward trend in the international oil prices,” said the leader. Prime Minister Syed Yousuf Raza Gilani and PPP Cochairperson Asif Ali Zardari during their visit to the Kingdom in early June this year had requested the oil facility of deferred payments.

The issue was later discussed between Finance Minister Syed Naveed Qamar and Saudi Ambassador to Pakistan Ali Awadh Asseri last month. Pakistan had first received $1 billion Saudi Oil Facility (SOF) in 1998 when it faced international sanctions because of testing a nuclear bomb.

The facility remained intact till 2003 when Pakistan received only $300 million. The resumption of the SOF is being considered very important at a time when there had been over $5 billion draw-down on foreign exchange reserves which now stood at less than $11 billion against $16 billion plus in November 2007.

These $11 billion reserves also included $2.9 billion held by the banks. “And more than $2 billion forex liability has been created by central bank which has to be met at their maturities. In net shell our reserves today stand at around $6 billion,” a source said.

Sources said that Saudi Arabia has also assured to encourage investment in the privatisation programme which seeks to collect over $2 billion during the current financial year.

Pakistan planned to hold two international investment conferences in Jeddah and Riyadh soon in which top Saudi investors will participate and to make new investment in Pakistan particularly in the oil and gas, agriculture, information technology (IT), construction and real estate sectors Pakistan wants to increase per acreage and agricultural yield by having foreign investment for which large chuck of land was expected to be given on lease especially to the Saudi investors.