ISLAMABAD: The meeting of the Economic Coordination Committee of the federal cabinet will be held on Tuesday, which will likely to approve an agreement with Azerbaijan for fuel supply on credit.
The ECC meeting which will be headed by Finance Minister Asad Umar will also consider measures for controlling the price of Urea. Despite import, the price of the fertilizer is on the rise in the country.
The ECC will also consider the arrangement of funds for payment of dues to employees of the Pakistan Machine Tool Factory.
According to media reports, Azerbaijan had offered to supply petroleum products to the Pakistan State Oil (PSO) through the State Oil Company of Azerbaijan Republic (SOCAR) on credit under a long-term agreement.
The two sides had entered into an inter-governmental agreement (IGA) in February 2017 for the supply of a number of oil and gas products, including furnace oil, petrol, diesel and liquefied natural gas (LNG). The PSO and SOCAR are now expected to formally sign a commercial agreement for the supply of motor gasoline (petrol) against a 4-6 month credit facility of $100-150 million.
The sources said the demand for furnace oil had since tumbled in Pakistan as its LNG imports streamlined, while the PSO already had a long-term supply contract with the Kuwait Petroleum Company (KPC) for diesel on credit. They said SOCAR had an oil facility in Dubai from where it had the capability to supply petrol to the PSO through a swap arrangement given the fact that the former Soviet republic was landlocked and only oil and gas exited through Turkey-Georgia pipeline named Baku-Ceyhan-Tblisi pipeline.
Pakistan has been seeking oil supplies on deferred payments from two major sources — Saudi Arabia and the United Arab Emirates — to secure foreign exchange cushion direly needed to support the declining reserves. It has already secured a $3 billion oil facility per annum from Saudi Arabia that would actualise in January at a rate of about $375m per month. A similar arrangement is currently under process with the UAE.