Saudi Arabia subsidises $4.82BN worth of oil for Pakistan, announces multi-billion dollar infrastructure investments
While the world reels under the pressure of rising oil prices. Pakistanis have something to celebrate. Mr. Zardari, the co-chairperson of the ruling People’s Party, and the Prime Minister, Mr. Yusuf Raza Gilani were in Saudi Arabia to discuss a number of bilateral issues with various Saudi officials, including King Abdullah. As a consequence of these discussions, the Saudi government has made a series of announcements that many in Pakistan will be pleased to hear.
First, Saudi Arabia will extend a special oil facility to Pakistan (SOF) to the tune of USD $4.82BN, or roughly equating to 110,000 barrels of oil per day.
Second, Saudi Arabia will invest several billion dollars in infrastructure investments in Pakistan.
Finally (and separate from these announcements) the UAE will continue to provide oil to Pakistan on extended payment terms.
Mr. Zardari will be providing additional details in an upcoming press conference. These announcements should do a lot to boost Pakistan’s economic indicators. For one, it represents almost 50% of the trade deficit and almost instantaneously wipes out the bulk of it. For another, the FDI inflows as a consequence of infrastructure investments will, in the short term, provide additional USD$ reserves and in the long term, will add significant capacity to the economy. The Business Recorder report can be found after the fold.
Saudi Arabia agrees to provide oil on soft terms
RECORDER REPORTISLAMABAD (June 11 2008): The Saudi government has finally agreed to provide Pakistan crude oil worth $4.82 billion on soft terms, it has been learnt. According to highly placed sources in the Ministry of Petroleum, PPP co-chairman Asif Ali Zardari, who is scheduled to return from Saudi Arabia on Wednesday morning, has successfully managed to obtain for the country a highly crucial Saudi oil facility of 110,000 barrels a day on two years credit.“Mr Zardari has been able to restore special oil facility known as SOF that Pakistan had enjoyed from the days of last Nawaz Sharif-led government till the three first years of this decade,” sources told Business Recorder, requesting anonymity.
Besides, various Saudi companies have agreed to invest billions of dollars in Pakistan’s infrastructure
I have heard conflicting reports about this. I think the Saudis have denied giving any such major subsidies. Is there any other source of the story besides the speculation by the business recorder?
There are several other sources:
DAWN Pakistan: http://www.dawn.com/2008/06/09/top2.htm
The Daily Times makes a reference to the oil deal in their editorial:
http://www.dailytimes.com.pk/default.asp?page=2008%5C06%5C13%5Cstory_13-6-2008_pg3_1
As for additional Saudi investment in Pakistan, the Khaleej Times has this story on Saudi Arabian business delegations visiting Pakistan to secure rights to farm grains in the country:
http://www.khaleejtimes.com/DisplayArticleNew.asp?section=business&xfile=data/business/2008/june/business_june462.xml
[...] had reported a few weeks ago that Saudi Arabia and Pakistan had extensive investment discussions when Prime [...]