As part of the Saudi financial package aimed at baling Pakistan out of its current financial crisis, the country is expected to start receiving oil from the Kingdom on deferred payment in January.

Media reports said that the agreement regarding the facility has been completed and a revised draft has been sent to Riyadh for signature.

A report in the local media said technical issues regarding the agreement has been worked out and that the other aspects will be finalized by the second week of next month. After that, the deal will be signed by ministers of both the countries.

As per the proposed agreement, Pakistan will receive up to $3 billion worth of oil with payment deferred for 365 days in the first year of the agreement in 2018. The Saudi Fund for Development will act as a third party in the agreement.

Pakistan based refineries will place orders with Saudi Aramco — a government-owned company —for supplying crude oil. Pakistan has a long-term contract with Aramco for supplying 110,000 barrels per day (bpd). Of these, Pak Arab Refinery Ltd (Parco) has a quota of 60,000bpd while the remaining quota of 50,000bpd is allocated to National Refinery Limited (NRL).

Both Parco and NRL will place orders for import with Aramco. The Saudi Development Fund will pay in dollars to Aramco. However, these refineries will deposit an equivalent amount in Pak rupee with State Bank (SBP) here in Pakistan.

The SBP will begin repayments to the Saudi Development Fund 12 months later, with monthly payments. For example, the January 2019 payment will be made in January 2020.

This arrangement will be in place for a period of three years, with oil imports worth $9 billion.