Prime Minister Shehbaz Sharif is expected to request Saudi Arabia to increase the volume of the oil deferred payment facility to ease the pressure on foreign exchange reserves amid record oil prices in the global market in the wake of Russia-Ukraine war.
Sources told The Express Tribune that Saudi Arabia was already providing deferred payment facility for oil imports worth $100 million to Pakistan. The government officials said that Premier Shehbaz, who will leave for Saudi Arabia to perform Umrah on April 27 (today), would plead the Saudi leadership to increase its volume from $100 to $200 million per month.
It means that the current annual volume of Saudi oil facility on deferred payment was $1.2 billion and Pakistan wants to increase it to $2.4 billion annually to ease pressure on foreign exchange reserves that were depleting fast due to higher oil prices in the global market.
Pakistan’s monthly crude oil bill is around $1 billion and the same is for finishing petroleum products.
Saudi Arabia had also extended deferred oil payment facility worth $3 billion when former prime minister Imran Khan came to power.
The previous PTI government and Saudi Arabia had inked a deal for providing $3.2 billion worth of oil on deferred payment per annum.
However, the former ruling PTI and the Saudi leadership had developed differences and Pakistan had been unable to utilise the entire oil deferred payment facility.
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Even, Pakistan was forced to return $3 billion to Saudi Arabia that it had deposited in the State Bank of Pakistan to build the foreign exchange reserves. Later, it resumed the oil facility that was still ongoing worth $100 million per month.
The incumbent government had recently sought a bailout package from the International Monetary Fund.
The international lender had agreed to extend the package, however, it sought commitment to cut subsidies. The government had given assurance to increase prices of petroleum products to fulfil its commitment.
Due to high oil prices, the previous government had also frozen oil prices. Despite the move, the prices of petrol and high speed diesel were at record levels in the country. The government had recently approved a supplementary grant of Rs64 billion to keep the oil prices unchanged.
It had released the amount to clear price differential claims of oil companies till April 15, 2022. The sources said that the government had to clear an amount worth Rs50 billion which was due from April 16 for maintaining the existing oil prices.
The officials said that the government was to pay Rs51 per litre price differential claims on diesel due to keeping its price unchanged from April 15. Therefore, the government would have to increase the price of diesel by about Rs10 per litre effective from May 1, 2022.
As Eidul Fitr is approaching, the hoarders and black marketers started hoarding diesel that had disappeared from different parts of the country. The consumers had faced oil crisis in several times before. However, though different phases of oil crisis have passed in this country, no permanent solution had been worked out so far.
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