ISLAMABAD/LAHORE - Saudi Arabia has started supplying oil to Pakistan on deferred payments worth $9.9 billion, the Saudi embassy said on Monday.

Also, a team from Saudi Arabia arrived in Islamabad yesterday to begin the process for the provision of immigration facilities to Pakistani pilgrims under the Road to Makkah project, the Radio Pakistan reported.

A statement released by the Saudi embassy in Islamabad said: “Pakistan will start receiving monthly oil supplies worth $275 million from Saudi Arabia with effect from July 1. These supplies will continue over the next three years, with a total value of $9.9 billion.”

Last October, Saudi Arabia had announced an economic support package for Pakistan which included $3 billion for balance of external payments. Riyadh also announced providing Islamabad deferred payment facility for import of oil, worth more than $3 billion for three years - $3.2 billion per year - during the visit of Prime Minister Imran Khan to Saudi Arabia to attend the Future Investment Initiative conference on the invitation of King Salman bin Abdul Aziz Al-Saud.

The loan worth up to $3 billion in deferred payments for oil imports will help stave off an economic crisis. Pakistan is an oil importing country and meets its energy needs with imported oil. The country has imported oil worth $10 billion in the ongoing financial year so far.

Supplies worth $9.9b to continue over 3 years

Last month, Pakistan reached an accord with the International Monetary Fund for a three-year $6 billion bailout package, aimed at shoring up fragile public finances and strengthening a slowing economy. The deal, which still needs approval by the IMF board in Washington, would be the 13th such bailout since the late 1980s. Adviser to PM on Finance Abdul Hafeez Sheikh said the decision will strengthen Pakistan’s balance of payments position.

Saudi Arabia is already investing $20 billion in various sectors of Pakistan in the first phase. After his February visit to Pakistan, Crown Prince Mohammed Bin Salman had said the next investment in Pakistan would even be huge. Saudi Arabia announced seven investment agreements related to energy, tourism, minerals, petrochemicals, hotel industry events, and a $10 billion oil refinery and petrochemicals complex in the coastal city of Gwadar, where China is building a port.

 

Gwadar is the nerve centre of China-Pakistan Economic Corridor which has manifested investors’ confidence in the economy of Pakistan as the multi-billion dollar project is poised to bring massive investment in the country. Short-term projects worth $7 billion with a span of one to two years, medium-term projects worth $2 billion with a span of two to three years and long-term projects worth $12 billion with a span of three to five years are included in the agreements.

 

LNG POWER PLANTS

 

Saudi Arabia is interested in buying two Liquefied Natural Gas power plants including the Haveli Bahadur Shah Power Plant and Balloki Power Plant. Memorandums of Understanding of five hydropower projects worth SR1.207 billion were signed during the Crown prince’s visit. Under the agreement, SR375 million will be contributed for Diamer Bhasha and SR300 million for Mohmand Dam Hydropower Project.

Moreover, SR150.37 million will be granted for the Jamshoro power project whereas SR130.12 million will be provided for the Jagran Hydropower Project and SR247.5 million for the Shounter Hydropower Project. Pakistan has also approved the signing of $322 million financial agreement between Pakistan and Saudi Development Fund on a summary submitted by the Economic Affairs Division.

 

ROAD TO MAKKAH PROJECT

 

Under the Road to Makkah project initiated by Saudi Arabia, all immigration requirements are fulfilled at the airport of origin. The project also includes other Muslim countries, such as Indonesia and Malaysia. According to the Ministry of Religious Affairs, 90 per cent of Pakistani pilgrims will go through customs and immigration processes at the airports in Pakistan before leaving for Haj, instead of having to wait for 10-12 hours after arriving in Saudi Arabia.

Reportedly, the equipment required for immigration clearance has been installed in the Islamabad Airport’s departure lounge and 10 special counters have been set up where the Saudi team, along with Pakistani authorities, will carry out the immigration process. The Saudi team will start operations within two to three days. The authorities will complete the immigration process and screen the travel documents and luggage of pilgrims at the Islamabad airport. The pilgrims will not have to wait at airports in Saudi Arabia for immigration or their luggage, which will be transported to their place of stay.

This is the initial stage of the project and about 20,000 people will benefit under the pilot phase. The service will be provided to pilgrims travelling from Karachi and Lahore airports as well from next year if the project succeeds.