Saudi Arabia to provide $1.2bn oil on deferred payment to Pakistan

Saudi Arabia to provide $1.2bn oil on deferred payment to Pakistan

Islamabad, February 3, 2025 – Pakistan and Saudi Arabia have signed an agreement to import oil worth $1.2 billion on deferred payment terms, marking a crucial step in strengthening the bilateral ties between the two nations.

This agreement, which spans one year, was formalized on Monday in a signing ceremony attended by Prime Minister Muhammad Shehbaz Sharif and Sultan Abdulrahman Al-Marshad, the Chief Executive Officer (CEO) of the Saudi Fund for Development (SFD).

Under the terms of the deal, Pakistan will receive oil from Saudi Arabia on deferred payment, a much-needed arrangement that will alleviate the immediate fiscal pressures faced by the Pakistani economy. The oil import facility is expected to enhance Pakistan’s energy security, ensuring a stable and uninterrupted supply of petroleum products. The deferred payment will also provide Pakistan with breathing space in terms of managing its foreign reserves while addressing domestic energy demands.

The Prime Minister of Pakistan expressed his gratitude for this arrangement, emphasizing its role in bolstering Pakistan’s economic resilience. By securing a reliable oil supply from Saudi Arabia, Pakistan aims to reduce its energy import costs and mitigate the strain on its foreign exchange reserves. The agreement not only addresses Pakistan’s energy needs but also contributes to the overall stability of the economy during a period of fiscal challenges.

In addition to the oil import agreement, another memorandum of understanding (MoU) was signed between the two countries for a concessional loan agreement to fund the construction of a gravity-flow water supply scheme in Mansehra, Khyber Pakhtunkhwa. The project, valued at $41 million, will improve access to clean drinking water for approximately 150,000 residents, with provisions to meet the needs of over 200,000 people by 2040. This initiative aligns with Saudi Arabia’s continued support for Pakistan’s infrastructure and public health sector.

The signing ceremony was also attended by several key Pakistani officials, including Deputy Prime Minister and Foreign Minister Mohammad Ishaq Dar, Ambassador of Saudi Arabia in Pakistan Nawaf bin Said Al-Malki, and senior representatives from the Economic Affairs Division and other relevant government departments.

Prime Minister Shehbaz Sharif, in a meeting with the SFD delegation, reaffirmed the strong relationship between Pakistan and Saudi Arabia. He praised the support Pakistan has received from Saudi Arabia in sectors such as health, energy, infrastructure, and education, as well as its aid in the aftermath of the 2022 floods. The Prime Minister also highlighted the importance of accelerating the processing of new projects, particularly those in the field of green energy, which will play a key role in Pakistan’s economic revival.

Sultan Al-Marshad, the CEO of SFD, expressed gratitude for the warm reception from the Pakistani leadership and reiterated Saudi Arabia’s commitment to supporting Pakistan’s development goals. He assured that the Kingdom would continue to assist Pakistan in its various projects, underscoring the enduring partnership between the two nations.

As Pakistan continues to navigate its economic challenges, Saudi Arabia’s unwavering support through initiatives like these will be instrumental in ensuring sustainable growth and development.