Riyadh will provide $3.6b to buy crude oil: Tarin

Minister says govt will receive $150m per month under agreement

ISLAMABAD:

A day after the government increased the prices of all petroleum products to a record-high level, Finance Minister Shaukat Tarin on Friday announced that an agreement was reached with Saudi Arabia under which Riyadh would provide $3.6 billion to purchase crude oil.

Talking to media persons in Jhelum, the finance minister said that this time around, Riyadh has agreed to “give cash for the purchase of oil [from any country] as its oil is not utilised properly in our refineries”.

On Wednesday, Tarin in response to a question in the National Assembly had disclosed that an agreement for another Saudi oil facility had been reached and would be formally announced within two to three days.

“Saudi Arabia will pay $3.6 billion to the government of Pakistan on a monthly basis over a period of two years,” Tarin said while talking to the media in Jhelum.

He said the government would receive $150 million per month that would be utilised only for oil purchase.

Addressing a news conference along with Minister of State for Information and Broadcasting Farrukh Habib, Tarin reiterated that the government was absorbing the impact of the decade's highest price hike at international level to provide relief to the people through various measures including direct food subsidy to the poor.

The federal minister said that Covid-19 pandemic had triggered price hike across the globe, adding that since Pakistan was an importer of some essential commodities, it was impacted too. However, he added that the government did not pass on all this impact to the people.

On the hike in petrol price, the minister said that Pakistan stood at 17th among the countries providing the commodity at the lowest prices, adding that the majority of the other 16 countries having lowest prices than Pakistan were oil-producing countries.

He said petrol prices in the country were even lower than in regional countries, as it was being sold at Rs127 per litre in Pakistan whereas its price in India was Rs235 per litre and Rs195 per litre in Bangladesh.

He said the government wanted to reduce prices as it had already slashed the petroleum levy from Rs30 in 2018 to just Rs2.5 per litre.

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He said the government had budgeted Rs600 billion from petroleum levy, which could be affected as the prime minister wanted to provide relief to the people.

The minister said that it was very unfortunate that no proper attention was given to the agriculture sector for the last three decades and resultantly, the country had become a net importer of wheat, sugar, pulses and ghee and was directly affected by world inflation.

He said despite all this, the government had taken measures to provide relief to the people, particularly the poor. The government had to buy sugar at higher rates, but it would be available at around Rs90 per kilogramme.

Likewise, ghee prices that witnessed around 80-90 per cent hike in the international market and was available at Rs350 per kilo in Pakistan, would fall below Rs300.

He said the government would also provide direct food subsidy to 12.5 million families which constitute around 44 per cent of the total population. The subsidy would be provided on flour, sugar, ghee and pulses.

He said the government was also evolving a mechanism to minimise the role of middleman, which he said was one of the major causes of inflation, adding that the provinces had also been asked to reestablish provincial price administrators to control prices.

The minister said that the economy of the country was growing as the revenues had witnessed over 38 per cent increase and exceeded the target by Rs186 billion.

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This means the economy was growing, he said, expecting that it would grow by 5% during the current fiscal year and resultantly it would have a trickledown effect.

He said major sectors of economy including agriculture, industry and services sector were witnessing growth.

He said the Kamyab Pakistan Programme would also be launched soon under which farmers would be provided interest-free loan of Rs150,000 per crop, Rs200,000 interest-free loans on mechanization whereas the urban households would be provided Rs500,000 per family to start businesses.

In addition, the government was also providing loans up to Rs2 million at 2% interest for construction of houses and health cards were also being provided to facilitate the people.

He said that the prime minister was very concerned about the welfare of common people.
About debts, the minister said that the debt-to-GDP ratio came down by 4% last year, expecting that it would come further down during current year.

To a question, the minister said that the government would sincerely negotiate with the International Monetary Fund (IMF). He said, “We had promised to collect revenues of RS5.8 trillion and the collection numbers till date show that the target would be exceeded.”

He said the power sector faces certain challenges, adding that enhancing tariff rates, as advised by the IMF, was not a solution to the issue, so “we would like the IMF to provide space in this matter”.