Islamabad, Sep 2 (UNI) Saudi Arabia has asked Pakistan to wait for its final response regarding the Saudi Oil Facility (SOF) till the election of its new president.
Daily Times quoted sources in the petroleum ministry as saying that Saudi Arabia did not give a final response when a delegation led by Finance Minister Shah Mahmood Qureshi, who also holds the charge of the petroleum ministry recently visited the kingdom for talks on the issue.
Saudi Arabia said it was observing the current situation in Pakistan and would give a final response on the oil facility after the presidential election.
The sources said the Pakistani delegation placed two requests before the government of Saudi Arabia. One was to grant a one-year extension in the oil credit facility enabling Pakistan to import oil on deferred payments.
The other request was for a grant to ease the financial burden on oil imports, as during the last financial year the import bill had exceeded 11 billion dollar. Higher fuel consumption by electricity generators during power shortages had increased demand for oil.
The government which has estimated that the oil import bill will surge over 14.5 billion dollar in the current fiscal year, is under tremendous pressure regarding the soaring oil bill.
Besides requesting different Islamic countries to grant extension in oil credit facility, the government is also taking energy conservation measures to curtail oil import. The measures include proposals for five working days in a week and the closure of petrol pumps one day a week. The conservation measures are expected to reduce oil consumption as well as the oil import bill.
They claimed that if Pakistan were denied extension in oil credit facility, it would get a 500 million dollar grant from Saudi Arabia to ease the oil import burden on the budget.
The Saudi government had already provided 300 million dollar to Pakistan in the month of March to meet budgetary gaps and promote macro-economic stability in the country.
Pakistan imports around 110,000 barrels of oil per day. If the two countries agree on the extension in the oil credit facility, Pakistan will receive around 40 million barrels of oil in one year from Saudi Arabia, providing foreign exchange cushion of six billion dollar.
The sources claimed that the oil credit facility would benefit the government more than a loan to bridge the deficit created by the high oil import bill. They said former governments had not spent the loans to resolve the oil crisis, and had spent them on non-development projects.
They said the government had borrowed Rs 165 billion from local commercial banks to pay differential claims to oil marketing companies.
Pakistan is also negotiating with other countries including Kuwait, United Arab Emirates and Qatar to seek extension in oil credit facilities for importing oil on deferred payments.
UNI XC PD KP1232