ISLAMABAD: The Saudi Fund for Development (SFD) and Pakistan, on Thursday, signed a new agreement to finance oil derivatives worth $1 billion to Pakistan.
The agreement was signed by Chief Executive Officer (CEO) of SFD, Sultan Abdulrahman Al-Marshad, and Secretary Ministry of Economic Affairs Dr Kazim Niaz in the presence of Saudi Arabia and Pakistani officials.
The Ministry of Economic Affairs issued a statement that states “aimed at supporting Pakistan’s economy, sector growth, and navigating economic challenges, the strategic agreement signed comes as a continuation of the support provided by the Government of Saudi Arabia to the brotherly country Pakistan to build a sustainable economy. In 2019 and 2021, the SFD signed agreements to finance oil derivatives with a value of $4.44 billion.”
The agreement marks the latest steps taken by the government of Saudi Arabia through the SFD and the Pakistani authorities to enhance development in the country. Since the Fund’s establishment, the SFD has supported more than 40 projects and programs in different development sectors valued approximately at USD 1.4 billion to finance Pakistan’s energy, water, transportation, and infrastructure projects.
The Finance Ministry last month informed the Senate regarding the oil purchase agreement, while saying that the Saudi government through SFD has offered an oil facility on deferred payments worth $1 billion for 10 months. The terms of the financing include the price of purchase by SFD along with a margin of 3.80 percent per annum. The said agreement was submitted for approval of the Cabinet. As soon as Cabinet’s approval was received, the agreement would be signed.
Regarding the new agreement, the EAD stated that in implementation of the directives from King Salman bin Abdulaziz Al Saud, and the Crown Prince, Mohammed bin Salman Al Saud; the CEO of the SFD, Sultan Abdulrahman Al-Marshad, and the Secretary Ministry of Economic Affairs in Pakistan, DrKazimNiaz, signed an agreement to finance oil derivatives worth $1 billion to Pakistan.
Earlier, the financing agreement worth $1.2 billion for the import of petroleum products was signed in November 2021 between the SFD and Pakistan’s Economic Affairs Division (EAD). Under this facility, the Pak-Arab Refinery Limited (PARCO) and the National Refinery Limited (NRL) are importing 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. The EAD data shows that Pakistan imported petroleum products worth $500 million on a deferred payment basis under the Saudi oil facility during the first five months of the current fiscal year 2022-23.
The country imported petroleum products worth $100 million on a deferred payment basis under the Saudi oil facility for the ninth consecutive month in November 2022, taking the total imports to $0.9 billion. Saudi Arabia also provided petroleum products worth $100 million each during March, April, May, June, July, August, September, and October 2022