Previously, the Saudi Fund for Development (SFD) has already provided Pakistan $531 million for project financing for power projects including the Mohmand Dam and other coal-based and hydropower projects including two in Azad Kashmir.
This new financing by the ITFC will go to the Pak-Arab Refinery Ltd (PARCO), Pakistan State Oil (PSO), and Pakistan LNG Ltd (PLL) that will use the money to import crude oil, refined petroleum products, and LNG. The financial facility will also allow Pakistan to augment foreign currency reserves.
Between July 2020 to May 2021, Pakistan’s oil import bill had amounted to nearly $10 billion and has been increasing since then on the back of the rising international oil prices. Additionally, Pakistan also imported $2.5 billion worth of LNG and $2.5 billion worth of crude oil, along with $4.5 billion worth of refined petroleum products.
The report stated that this financing will come at a cost lower than the existing one, considering the high liquidity of the UAE and KSA banks and the lower business activities due to the COVID-19 wave in the region.
The funding may also cover agricultural commodities including DAP fertilizer.