Pakistan Reaches Agreement on Saudi Oil Facility on Deferred Payment: Finance Minister

Pakistan has reached an agreement for a Saudi oil facility on deferred payment as global oil prices surge.

Finance Minister Shaukat Tarin told the national assembly today that Saudi Arabia has agreed to provide oil supplies on deferred payment.

“They are not only considering another oil facility on deferred payments but an agreement has almost been reached that would hopefully be made public in two or three days,” said Tarin in response to a question about the issue.

Tarin told the lower house that Saudi Arabia has already granted a $5 billion package of oil supplied on deferred payment.

“They provided us $5bn in cash and took it back slowly,” he said. “As we speak, Saudi Arabia is considering another oil facility on deferred payments on request to absorb the impact of rising oil prices in the market.”

Today, prices of petroleum products in the domestic market are expected to increase to Rs. 5.35 per liter from Rs. 2.60 for the next two weeks. That is if the government accepts the Oil and Gas Regulatory Authority’s (OGRA) calculations without increasing tax rates.

However, the government might hike tax rates and oil prices slightly higher, a senior official told Dawn News, ahead of upcoming talks with the International Monetary Fund (IMF) on 4 October.

If tax rates, import parity price, and rupee depreciation stay the same, the price of petrol is expected to rise to Rs. 5.35 per liter, while that of high-speed diesel is projected to rise to Rs. 2.60. Meanwhile, the prices of kerosene, light diesel oil, and other petroleum products are expected to increase to Rs. 2 per liter each.

Global oil prices have skyrocketed in the past months amid rising energy demand as countries start to recover from the COVID-19 pandemic’s economic slowdown.