Pakistan has so far imported $100 million in petroleum products on a deferred payment basis through the Saudi oil facility. On November 29, 2021, Pakistan signed a $1.2 billion agreement with Saudi Arabia to import petroleum products.
According to government sources, the brotherly country has begun to supply petroleum products to Pakistan under the terms of the agreement. In March 2022, Saudi Arabia provided petroleum products worth $100 million.
Pakistan will import a total of 32.7 million barrels of crude oil and petroleum products this year under a deferred payment agreement signed with the Saudi Fund for Development (SFD) to meet its needs for petroleum products.
In 2022, the Pak-Arab Refinery Company Limited (PARCO) and the National Refinery Limited (NRL) will import 16.89 million and 15.81 million barrels of oil, respectively.
Petroleum products worth $100 million can be imported from Saudi Arabia on a deferred payment basis every month for a year under the agreement. The facility is available for a one-year extension. According to the terms of the agreement, the original amount plus the 3.8 percent interest rate would be repaid in one annual installment in US dollars.
It is worth noting that Pakistan’s foreign reserves have been rapidly depleting in recent weeks. The State Bank of Pakistan’s resources is only enough to cover a two-month import bill. According to the IMF, a country like Pakistan should have forex reserves equal to four months’ worth of imports.
The facility will assist the government, which is currently struggling to build sustainable forex reserves to control the rupee’s depreciation against the US dollar and make timely foreign payments.