Gulf kingdom would provide oil for three years, comes following change in government
Saudi Arabia is expected to hand Pakistan an up to $15bn bailout for its indebted energy sector following recent elections in the country, it has been reported.
A senior government official in the Gulf country told Pakistani newspaper Dawn that Saudi would provide crude and furnace oil to the country on a deferred payment basis, which would help ease Pakistan’s circular debt issue.
The unnamed official told the newspaper that Saudi was looking to co-operate with Pakistan following the election Nawaz Sharif’s PML-N government this month. According to the report, Saudi sees the new PML-N administration as more amiable than its PPP predecessor, which is said to have annoyed the kingdom by warming diplomatic relations with Iran and cancelling hunting facilities for Saudi royals.
Dawn reported that as soon as PML-N emerged as the leading party in Pakistan’s recent general elections, the ambassador to Saudi Arabia in Islamabad immediately sought details of the country’s energy requirements from the country’s Foreign Ministry.
Under the deal, Saudi Arabia would provide Pakistan with 100,000 barrels of crude oil and 15,000 tonnes of furnace oil on deferred payment for three years. At current prices, the agreement would be valued between $12bn and $15bn.
“During the package period, the PML-N government can resolve the electricity crisis and develop hydropower projects through a combination of public and private investments and bagasse-based power production by the sugar industry,” the Saudi government official told the newspaper.
Pakistan’s total bill for energy imports is said to stand at about $15bn, while the country suffers chronic outages and load-shedding in certain areas.
Between 1998 and 2002, Saudi Arabia provided Pakistan with about $3.5bn worth of oil, also on deferred payment. This package came shortly after the country faced economic sanctions as a result of its nuclear programme.