Saudi Arabia won't supply oil on deferred payments: request turned down

Saudi Arabia has declined a Pakistan request for supply of oil on deferred payments, sources told Business Recorder on Thursday. Sources said Pakistan formally made the request to the Saudi government for the supply of oil on deferred payments during caretaker Prime Minister Mohammadmian Soomro's visit to Saudi Arabia a few weeks back.
However, it got poor response for the request. Soomro had flown to Saudi Arabia to perform Umra, besides holding meetings with King Abdullah and other senior Saudi authorities on bilateral issues, including oil import.
Saudi Arabia is one major source from where Pakistan imports oil to meet its demand. Its second source for oil import is Kuwait. Pakistan's local production meets less than half of its demand annually. Heavy dependence on import for oil demand is always a troubling factor for Pakistan's economy.
Now when Pakistan is facing difficulty in managing fiscal affairs due to slow performing of various key sectors of the economy, its oil import bill is cruising close to 10 billion dollars for 2007-08. Among other options for off-setting mounting pressure on the economy, the caretaker government thought it a better option to approach Saudi Arabia for oil supply on two years' deferred payments.
Before putting it before the Saudi authorities, the proposal was discussed at the highest level and subsequently Soomro's visit to Saudi Arabia was considered the right time to formally made the request for the concession.
Saudi Arabia supplied Pakistan oil on deferred payments for three years from 1998 to 2001 to bail it out from difficult economic situation after its nuke test in May 1998. Pakistan approached Saudi Arabia soon after the nuclear tests in 1998, for supply of oil on deferred payment.
The year 1998 was a crucial time for Islamabad when Nawaz government denoted nuclear bomb to declare Pakistan as a nuclear power and in reaction the US and other major donor countries had imposed economic sanctions on it.
Originally, Saudi Arabia's concession for deferred payments in 1998 was for two years and its net benefit to Pakistan was 3.5 billion dollars. However, after expiry of the stipulated period, Saudi Arabia extended the payments for another one-year. The rulers wanted the same arrangement this time too, but they, perhaps, forgot that now it is 2008 and they had done nothing like 1998.