ISLAMABAD: Prime Minister Shehbaz Sharif will request Saudi Arabia to increase the quantity of the oil supply to Pakistan on deferred payment to ease the pressure on foreign exchange reserves amid record oil prices in the global market in the wake of Russia-Ukraine war. OPEC crude oil prices are staying around $106/barrel mainly because of the ongoing Russia-Ukraine conflict.
PM Shehbaz Sharif is scheduled to leave for Saudi Arabia today along with his delegation and family members. During visit to KSA, the Prime Minister will request Saudi authorities to double the amount of oil supply on deferred payment from $100 million dollars a month to $200 million.
Saudi Arabia has been providing deferred payment facility for oil imports worth $100 million to Pakistan in a month.
If the request of PM Shehbaz is accepted, the current annual volume of Saudi oil facility on deferred payment will double to $2.4 billion in a year, from earlier amount of $1.2 billion. 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.
