IDB to lend $551 million for oil, LNG imports

ISLAMABAD: The International Islamic Trade Finance Corporation (ITFC), a subsidiary of Islamic Development Bank, will lend $551 million to Pakistan to help the country meet its oil and liquefied natural gas (LNG) import needs, finance ministry said on Monday.

Adviser to the Prime Minister on Finance, Revenue and Economic Affairs Abdul Hafeez Shaikh witnessed the signing of loan agreement amounting to $551 million with the International Islamic Trade Finance Corporation (ITFC).

The loan facility will be utilised by Pakistan State Oil Company Limited (PSO), Pak Arab Refinery Limited (Parco) and Pakistan LNG Limited. The agreement was signed among the Economic Affairs Division and ITFC and the representatives of PSO, Parco and Pakistan LNG Limited.

The financing agreement provides trade financing for one year for import of oil and LNG. ITFC agreed to provide trade financing of $1.3 billion during 2019 for import of oil and LNG. “This facility is a part of framework agreement signed with ITFC in April 2018 for a total envelop of $4.5 billion over for a period of three years (2018-2020),” the finance ministry said in a statement.

“Signing of this financing facility will be helpful in financing oil and gas import bill of the country and easing of pressure on foreign exchange reserves of the country. This agreement also reflects confidence of international financial institutions in Pakistan’s economy and its future.”

Import bill of petroleum products, including oil and LNG, accounts for 26 percent of imports of $40.754 billion in the first nine months of the current fiscal year of 2018/19, according to the Pakistan Bureau of Statistics.

Last year, the country imported nearly seven million tons of LNG, which could grow to as high as 15 million tons this year and up to 25 million to 30 million tons over the next three to five years.

Currently, the country has two LNG terminals with regas capacity of 1.2 billion to 1.3 billion cubic feet per day, or around nine million to 10 million tons of LNG a year. Shaikh thanked and appreciated ITFC support for Pakistan.

Meanwhile, the finance adviser emphasised the need to expedite the finalisation of the new financing in the pipeline before June-end. He was talking to the World Bank Country Director Patchamuthu Illangovan.

They discussed the ongoing projects being supported by the World Bank, according to a separate statement. Shaikh assured the country director that all approvals would be expedited to ensure timely disbursement. It was also agreed World Bank Chief Executive Officer Kristalina Georgieva would meet the Prime Minister in China during his visit later this month.