Pakistan hopes to secure $3.2b oil credit facility

Measure needed to address balance of payments crisis

Zafar Bhutta January 05, 2019

ISLAMABAD: Pakistan is hopeful that Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan will announce $3.2 billion oil credit facility during his upcoming visit to help address the balance of payments crisis.

Pakistan also hopes to secure total annual oil and liquefied natural gas (LNG) oil credit facility worth $7.9 billion from Saudi Arabia, Abu Dhabi and International Islamic Trade Finance Corporation (ITFC) for the purpose.

The Abu Dhabi crown price will reach Islamabad on January 6 to meet Prime Minister Imran Khan.

Abu Dhabi crown prince to arrive in Pakistan on January 6

During this visit, Pakistani authorities say, “As negotiations with Abu Dhabi have matured, the crown prince will announce $3.2 billion credit oil facility for Pakistan following the same model of Saudi Arabia.”

The United Arab Emirates (UAE) already announced to deposit $3 billion in Pakistan’s foreign currency account to help it successfully overcome international payments crisis and avoid a stringent International Monetary Fund (IMF) bailout package.

Saudi Arabia had already announced to deposit $3 billion in the State Bank of Pakistan (SBP) and one tranche of $1 billion had already been deposited.

A senior government official said the credit oil facility worth $3.2 billion was an additional support to Pakistan to overcome balance of payments crisis, adding that total support to Pakistan would reach $6.2 billion from the UAE government. He said UAE was also supporting Pakistan on the model of Saudi Arabia.

In addition to this, UAE was also making billions of dollars investment in new project of Pak Arab Refinery Limited (Parco) that is a joint venture between Pakistan and Abu Dhabi.

Parco was also setting up a new coastal oil refinery with over $5 billion investment.

Saudi Arabia had already announced to keep $3 billion in the SBP and also announced $3.2 billon credit oil facility for Pakistan.

These two countries were supporting Pakistan on the same model, the official added. The crown price of UAE would also announce credit oil facility amounting to $3.2 billion during his visit to Pakistan.

Pakistan also hopes to secure $1.5 billion credit facility for LNG imports from the ITFC.

The total oil import bill of Pakistan amounted to $12.5 billion and out of it, Pakistan was going to arrange credit oil facility worth $6.4 billion, an official said.

The official further said Pakistan was currently importing eight LNG cargoes every month.

With UAE aid, Pakistan bridges half of financing gap

Of these, Pakistan imported five LNG cargoes from Qatar and three from Gunvor and ENI. The total annual LNG import bill amounted to $4.2 billion to $4.5 billion.

The officials said ITFC would provide $1.5 billion credit facility for LNG imports. They said Pakistan was also discussing to take up the issue of extension in credit LNG facility with Qatar to ease pressure on foreign exchange followed by balance of payments crisis.

Pakistan expects a total of $9 billion oil and LNG credit facility from Saudi Arabia, UAE, ITFC and Qatar, the official added.


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