https://arab.news/y6pfv
- Islamabad has incurred huge losses on the facility due to rupee-dollar parity over the past year
- Cash-strapped Pakistan is currently looking to secure cheaper energy imports due to forex crunch
ISLAMABAD: The Pakistani government on Tuesday approved an additional grant of $95 million to overcome losses in a Kuwaiti diesel credit facility, the Pakistani finance ministry said, citing heavy exchange losses due to rupee-dollar parity over the last one year.
The statement came after a meeting of the Economic Coordination Committee (ECC) of the cabinet, wherein the Pakistani energy ministry submitted a summary on credit facility from Kuwait.
Under the facility, the state-owned Pakistan State Oil deposits an amount in rupee equivalent with the National Bank of Pakistan every 30 days from the bill of lading date of each shipment and transfers the cargo cost to the Kuwait Petroleum Corporation (KPC), a Kuwaiti national oil company.
"This account has witnessed huge exchange losses due to upheaval in the rupee-dollar parity during the last 12 months," the finance ministry said in a statement.
"The GoP (Government of Pakistan) is committed to cover these exchange losses. Considering the above situation, the ECC approved an immediate technical supplementary grant of Rs27 billion ($95.8 million) for the Kuwait petroleum company."
Pakistan has been utilizing the KPC credit facility on the supply of diesel under a term contract with the PSO since 2000. The contract is renewed every year.
The cash-strapped South Asian country, which imports most of its energy needs, is currently looking to secure cheaper imports due to a severe foreign exchange crunch.
In view of Pakistan’s deteriorating economic conditions and its forex reserves depleting to critically low levels, Russia said in January it would allow Islamabad to pay for energy imports in currencies of friendly countries.
Pakistan is expected to start receiving cheaper Russian energy imports early next month.