ISLAMABAD: Significant change was seen in Export Payment Policy of Pakistan at the arrival of discounted Russian crude oil when the country despite its US dollar-dominated export payments policy, paid payment to Russia in Chinese currency.
Pakistan has received its first government-to-government import consignment of discounted Russian oil, the sources in Petroleum Ministry revealed, adding that the country made payment in Chinese Yuan.
Pakistan is facing worst crisis of foreign exchange reserves and balance of payments problem, the discounted crude offers by Russia with accetping payment in Chinese currency was a big relief for the country.
The foreign exchange reserves held by the State Bank of Pakistan are scarcely enough to cover a month of controlled imports.
The first shipment of discounted Russian oil arranged under a deal struck between Islamabad and Moscow earlier this year arrived in Karachi on Sunday. It is currently being offloaded at the port in the southern city of Karachi.
The sources have not revealed the details of the deal with Russia, including pricing or the discount that Pakistan received. The sources said that the payment was made in Chinese currency.
They said the purchase, Pakistan’s first government-to-government (G2G) deal with Russia, consisted of 100,000 tonnes, of which 45,000 tonnes had docked at Karachi port and the rest was on its way. Pakistan made the purchase back in April.
Pakistan’s purchase gives Moscow a new outlet to add to growing sales to India and China, as it redirects oil from Western markets because of the Ukraine conflict.
Despite being a long-standing Western ally and the arch-rival of neighboring India, which historically is closer to Moscow, analysts say the crude deal also presents a new avenue for Pakistan at a time when its financing needs are great.
Islamabad earlier this month also outlined a process to open barter trade with Russia, Afghanistan and Iran, another sign of the South Asian economy seeking avenues to buy and sell commodities without trading in dollars, which analysts say could be a shift from West to East.
Pakistan’s Refinery Limited (PRL) will initially refine the Russian crude. All the tests and trials had been done, which found that the Russian crude was fit to refine and market locally.
The sources dispelled the impression around the financial viability and the ability of local refineries to process Russian crude given Pakistan’s historical importation of Middle Eastern petroleum products. Pakistan run iterations of various product mixes, and in no scenario will the refining of this crude make a loss,
It will be blended with around 60-70 per cent Arabian light crude for refining and there is no need of making adjustments at the refinery to refine the Russian crude.
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