Pakistan seeks $3 bn oil on deferred payment from UAE

ISLAMABAD: In the wake of scarcity of dollars reserves, Pakistan has asked United Arab Emirates (UAE) for providing similar kind of oil facility on deferred payment up to $3 billion on the basis of 365 days as being finalised by Kingdom of Saudi Arabia.

Islamabad also made request to UAE for placing same terms and conditions as being done by KSA for providing oil facility on deferred payment.

“We have requested to UAE for providing similar oil facility on deferred payment as being finalised by KSA as currently payment is made on consignment basis after a month but now under the proposed mechanism the payment will be made after 365 days,” top officials of PTI government disclosed to The News here on Saturday.

This kind of breathing space if agreed to provide by UAE will help Islamabad to negotiate a better deal with the IMF. Pakistani authorities are expecting some positive outcome within this ongoing month on proposed financial package from all bilateral donors especially from Arab friends, said the official.

Pakistan’s fuel import both oil and LNG stood at $16 billion per annum basis, however, the total foreign currency reserves of the country stood at $13.7 billion out of which the reserves held by the SBP stood at just over $8 billion.

The oil consumption increased manifold in the country in last few years with rampant usage of vehicles when the oil prices in international market had touched the lowest ebb. Instead of getting gains of this windfall, the oil consumption had gone up so it neutralized all gains for Pakistan in terms of reducing its oil import bill.

It was also wrong policy of the PML-N led regime that they did not increase oil prices for political gains that resulted into increased consumption and caused heavily to the economy.

The KSA had already agreed for providing oil facility on deferred payment on 365 days basis. This facility, the sources said, have not yet operationalised. Things on this subject are at advanced stage and will be finalised soon.

Pakistan imported crude oil mostly from UAE and KSA as our dependence on UAE stands at around 57 percent and remaining 43 percent on KSA on annual basis.

However, official sources in Finance Division told The News that both KSA and UAE plainly conveyed to Pakistan that their financial packages should not be considered as an alternate to IMF bailout but it should be counted as substitute for the IMF support.

With this crystal clear message for PTI, the government is left with no other option but to go back to the IMF but it wants the Fund to show some lenient attitude towards Pakistan on placing some softer conditions.

On China front, Beijing does not want to portray itself as threat to international financial institutions and their arrangements. Although, China had played a catalyst role for establishment of Asian Infrastructure Investment Bank (AIIB) but they always took stance that it was meant to supplement the World Bank and Asian Development Bank and it should not be considered as opponent to other multilateral lending agencies.

Federal Minister for Finance Asad Umar had told reporters on Friday in his press briefing that China and UAE were agreed in principle for providing financial package to Pakistan and technical talks were underway to finalise its modalities with the expectations that it would be done within December 2018.