The Economic Coordination Committee (ECC) on Monday allowed Pakistan State Oil (PSO) to import oil worth $100 million from Azerbaijan on three months credit. The move is believed to ease out the pressure on the country’s foreign reserves.
In the past, Pakistan has heavily depended on Middle Eastern countries for oil imports. It is the first time that Pakistan has accepted the Central-Asian energy-rich Islamic state for its oil needs.
The initial offer is of oil export worth $100 million – but, the limit does not require any government guarantee and letter of credit.
Pakistan enjoyed a similar offer from Saudi Arabia a few months ago to fulfill its energy needs at a time when the country had foreign exchange issues.
Azerbaijan is keen to supply furnace oil on credit and below the market price, that too without any government guarantee or going into a bidding process. However, PSO seemed reluctant and decided to float a tender, said a senior official.
Azerbaijan has nominated its state-run company Socar to ink a commercial agreement with Pakistan’s nominee PSO.
“PSO should expedite arrangements under a government-to-government deal with Azerbaijan to avail the deferred oil payment facility,” the official said.
The talks between the two countries first started two years ago under the PMLN government when the energy ministries of the two countries signed an inter-governmental agreement in February 2017. Besides, the country has also offered to export crude oil, refined petroleum products and liquefied natural gas (LNG) on credit for three months. However, the previous government did not take up Azerbaijan on the offer.