Saudi Arabia Extends $1.2 Billion Deferred Oil Facility for Another Year

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The Kingdom of Saudi Arabia has extended the deferred payment facility for oil imports worth $1.2 billion to Pakistan through Saudi Fund for Agreement (SFD) for another year, sources have told ProPakistani.

It is expected that Pakistan will avail the extended facility from March 23 to Feb 24, sources claimed.

The Kingdom had first agreed to provide Pakistan with a one-year deferred payment facility for the import of oil back in 2018, with the facility starting in July 2019. The facility was revived towards the end of 2021, with oil imports materializing from March 2022.

It is pertinent to mention here that Pakistan has imported petroleum products worth $690.11 million on a deferred payment basis under the Saudi oil facility during the first seven months of the current fiscal year 2022-23 (FY23).

The total imports, under the said facility, since March 2022 now stand at close to $1.1 billion as Saudi Arabia provided petroleum products worth $100 million each during March, April, May, June, July, August, September, October, November, and December 2022.

Under the financing agreement signed in November 2021, the Pak-Arab Refinery Limited (PARCO) and the National Refinery Limited (NRL) import petroleum products up to $100 million per month from Saudi Arabia.

According to the official documents, the terms of the financing include the price of purchase by the SFD and a margin of 3.80 percent per annum.

As per the agreement mechanism, PARCO and NRL deposit the payments against their crude oil imports from Saudi Aramco in the Government of Pakistan (GoP) account with the State Bank of Pakistan (SBP) in equivalent PKR.

The amount deposited by PARCO and NRL is accounted for as external debt by the Economic Affairs Division. The Government of Pakistan makes repayment of principal, payment of margin, and/ or related charges, if any, to the SFD on the maturity date of each export credit.

The government is also trying to finalize the import of oil from Russia which is likely to be cheaper. The government wants to import the first cargo of oil from Russia during the current month.

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