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ISLAMABAD: Pakistan and Saudi Arabia Thursday agreed to operationalise the Saudi oil facility of $1.2 billion at the earliest.

The Financing Agreement worth $1.2 billion for import for petroleum products was signed on 29th November 2021 between the Saudi Fund for Development (SFD) and Economic Affairs Division (EAD), Pakistan. As per Financing Agreement, the SFD will extend financing facility up to $100 million per month for one-year for purchase of petroleum products on deferred payment basis.

According to the official documents available with Business Recorder, the terms of the financing includes price of purchase by SFD along with a margin of 3.80 percent per annum. The financing agreement will be initially valid for one year, which may be extended for another one year with mutual consent.

The signing of financing agreement will be followed by submission of sovereign financial guarantee from Pakistan side and opening of new Head of Account.

This will be simultaneously followed by signing of purchase contract between importer and Saudi Aramco and Saudi Aramco product trading company.

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The Finance Division vide their letter dated 03-01-2022 and 04-01-2022 has furnished the sovereign financial guarantee from Pakistan side as well as Head of Account. The same has been forwarded to Saudi Fund for development and Petroleum Division vide this ministry’s letter dated 05-01-2022. It is expected that it will take one and half month to sign the purchase agreement. After singing the purchase agreement, the financing agreement will be operationalised and importers (Parco and NRL) will materialise the first shipment of crude oil/oil products.

Ambassador of the Kingdom of Saudi Arabia in Islamabad Nawaf bin Saeed Al-Malkiy called on the Federal Minister for Economic Affairs Omar Ayub Khan, here on Thursday. Both the sides discussed ongoing development projects and new initiatives. The Minister for Economic Affairs appreciated the Saudi support in the priority development areas. During the meeting, it was agreed to operationalise the Saudi Oil Facility at the earliest.

They also discussed the remaining work of development projects in the earthquake affected areas of Azad Jammu and Kashmir (AJK) and Khyber-Pakhtunkhwa.

The SFD is providing financial assistance for various development projects in the areas of energy, health, education, and infrastructure. Most recently, the SFD has committed to provide financing for Mohmand Dam Project, Shounter Hydropower Project, Jagran-IV Hydropower Project, Gravity Flow Water Scheme Mansehra, and Abbottabad-Muzaffarabad Road Project.

The Saudi ambassador assured of continued support at all levels to further strengthen the bilateral economic cooperation between the two brotherly countries.

The Saudi ambassador expressed that the Kingdom of Saudi Arabia is committed to play a much stronger role in the socioeconomic development of Pakistan.

Copyright Business Recorder, 2022

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