Govt to get $1.1 bn to import crude oil, LNG

ISLAMABAD: Pakistan will get $1,100 million ($1.1 billion) to help finance crude oil imports and LNG, mainly by Pakistan State Oil in coming days. The facility will be available to the PSO this week, The News has learnt reliably.

The move will also help avert pressure on the rupee-dollar parity in coming days and ensure to meet immediate needs of the PSO to import crude oil and LNG to be provided other companies, officials of Finance Ministry told The News.

The government will borrow $900 million from International Islamic Trade Finance Corporation (ITFC) of the Jeddah-based Islamic Development Bank (IDB) to finance crude oil imports and $200 million from a local bank to import LNG. The ITFC – an entity working under the IDB – will lend the money under a short-term Murabaha financing arrangement, said officials at the Ministry of Finance. The ITFC will raise the money on its books from international capital markets and then lend it to Pakistan, they added. The money will be received during this week to be paid to the Ministry of Water and Power which will pay to the PSO. This facility will also lessen pressure on Pakistan’s external reserves, which on October 27, the latest data available on SBP’s website were $13.84 billion held by the SBP and $6 billion with commercial banks.

This is worth mentioning that the government has admitted in Parliament that size of circular debt stands at about Rs450 billion. Whereas independent sources insist that total size of the Circular Debt is Rs850 billion and at this stage the government is worried about current account deficit and is not in a position to pay Circular Debt. Out of Rs850 or Rs450 billion, Rs190 billion is to be paid to state-owned PSO, which is not in a position to import oil unless payments are not made.