Facing a growing energy crunch, Pakistan is keen to secure a long-term deal to buy Russian crude in Chinese currency, shared Federal Minister for Power Khurram Dastgir Khan in an interview with Bloomberg.
Last month, Pakistan placed its first order for discounted Russian crude under a new commercial deal struck between both countries.
Bloomberg reported that the payment for the first crude shipment was made in US dollars but Pakistan would like further purchases to be made in yuan, taking leverage of a currency swap arrangement with China, Khurram Dastgir Khan said in an interview with Bloomberg.
“We hope that if this becomes a long-term arrangement, it’ll become a rupee and Chinese currency transaction,” he said. “And perhaps that currency swap needs to become larger in order for us to take advantage of other opportunities that might arise.”
The report said that such a deal would also offer some relief to Pakistan, which remains heavily reliant on imported fuels to meet its growing energy needs.
The report said that the Russian oil was purchased at a discount, citing a spokesman in the energy ministry’s petroleum division.
The development comes at a time of massive economic distress in Pakistan. The country remains engaged with the International Monetary Fund (IMF) to resume its bailout programme that has been stalled at the ninth review since November last year.
Various measures including a floating exchange rate, additional taxes, and hike in energy tariffs have failed to convince the IMF to resume the bailout.
The Washington-based lender has expressed reservations about the government’s recently announced petroleum subsidy scheme.
However, Petroleum Minister Musadik Malik in a Bloomberg TV interview on Tuesday said that government remains committed to addressing the IMF concerns
Meanwhile, Khurram Dastgir during his interview with Bloomberg said that due to weaker demand Pakistan’s energy crisis isn’t as severe as last year.
This has put the country in a better position ahead of peak demand over summer, with Pakistan being able to produce more electricity from oil it has stockpiled recently and with additional coal generation coming on stream, he said.
Saudi Arabia links oil refinery’s setup with political consensus
Moreover, a plan for Saudi Arabia to build an oil refinery in Pakistan will be approved soon, added the minister.