Cash-strapped Pakistan plans to place its first order for Russian crude oil next month and it will take about four weeks for the commodity to reach the country, Minister of State for Petroleum Musadik Malik said.
Pakistan, which is currently grappling with high external debt and a weak local currency, is desperate to purchase cheap crude at discounted rates from Russia.
Finance Minister Ishaq Dar last year said that the country was considering buying discounted Russian oil, pointing out that neighbour India had been purchasing oil from Moscow and Islamabad also had a right to explore the possibility, Dawn news reported.
Subsequently, Malik travelled to Moscow for talks on issues including oil and gas supplies after which the government announced that it would purchase discounted crude oil, petrol, and diesel from Russia.
In December last year, Russia refused to provide Pakistan with a 30 per cent discount on its crude oil after the Pakistani delegation asked for a reduction in price.
A Russian delegation in January arrived here for talks to finalise the deal, during which the two sides decided to address all technical issues — insurance, transportation and payment mechanism — to sign an agreement by late March.
“After consensus on the technical specifications achieved, the oil and gas trade transaction will be structured in a way it has a mutual economic benefit for both countries,” a joint statement issued by the two sides during the three-day meeting then stated.
In an interview on the Geo News programme Jirga on Saturday night, Malik said that a number of agreements with Russia had been reached and Pakistan would place an order next month.
“However, it will take some time for the oil to reach Pakistan … nearly 26 to 27 days,” he stated, revealing that the commodity would arrive in the country via sea.
Malik also clarified that Russia had assured the government that it was giving Pakistan a discount as much as any other neighbouring country was receiving.
Talking about the government’s decision regarding separate gas tariffs for the rich and the poor, the minister said that the mechanism was devised on the orders of Prime Minister Shehbaz Sharif and Pakistan Muslim League-Nawaz supremo Nawaz Sharif.
“So we divided the country into the population of the rich and the poor … so if a poor woman is using a unit of gas she will give one-fourth of the bills that a woman in F-7 or Gulberg is paying,” he said.
“In Pakistan, 60 per cent of the population is poor and for them, we have either reduced the gas tariff or kept it the same as was in the past.”
The same, he went on to say, was the case with the petroleum subsidy. “Under it, the rich will pay Rs 300 for petrol and the poor will pay Rs 200 for the commodity.”
Cash-strapped Pakistan has been struggling hard to revive the USD 6.5 billion derailed IMF bailout package that the Washington-based global lender approved in 2019.
Although, its missteps, like the petrol subsidy and attempts to borrow directly from commercial banks, have further complicated matters for the cash-starved country, resulting in sky-high inflation.
A conservative internal assessment of the Finance Ministry on Friday suggested around 34 per cent inflation rate in March. The ministry said that a “potential reason for rising price level is political and economic uncertainty”.
The ministry also noted that the delay in finalising the USD 1.1 billion tranches of funding from the International Monetary Fund (IMF) programme was causing further economic distress.