ISLAMABAD, July 12: Saudi Arabia has agreed to provide crude oil worth $5.8 billion to Pakistan on deferred payments for the current fiscal year to overcome its increasing financial difficulties.

Sources at the ministries of finance and petroleum have confirmed that Saudi Arabia will provide oil on deferred payments, as requested by Prime Minister Syed Yousuf Raza Gilani and PPP co-chairperson Asif Ali Zardari during their meeting with Saudi King Abdullah bin Abdulaziz last month.

Finance Minister Syed Naveed Qamar met Saudi Ambassador Ali Awadh Asseri on Thursday to discuss modalities regarding the oil facility.

The prime minister’s adviser on economic affairs, Hina Rabbani Khar, told Dawn that there were “positive indications” about oil import on delayed payments from Saudi Arabia. However, she added, issues relating to mode of payments and size of oil facility had yet to be finalised.

Officials were reluctant to quantify the amount and said the modalities were being worked out.

They said Pakistan roughly imported 110,000 barrels of oil daily and 40,150000 barrels annually which, if calculated at the current price of $145 a barrel, amounted to about $5.8 billion. Of the total 202,000 bpd a year, half of crude oil is imported from Saudi Arabia.

Pakistan had first received the $1 billion Saudi oil facility in 1998 when it faced international sanctions for testing nuclear devices. It remained intact till 2003 when Pakistan received only $300 million of the facility.

Sources said that resumption of the Saudi oil facility was very important at a time when the country’s foreign exchange reserves had gone down to $11 billion from $16 billion in November last year. The $11 billion reserves include $2.9 billion held by banks.

“Over $2 billion foreign exchange liability has been created by the State Bank which has to be met at their maturities. In a nutshell our reserves today stand at $6 billion,” a source said.

The sources said Saudi Arabia had also promised to encourage investment in Pakistan’s privatisation programme which aimed to generate $2 billion during the current financial year.

Pakistan plans to hold two international conferences in Jeddah and Riyadh soon to attract foreign investment in oil and gas, agriculture, information technology, construction and real estate sectors.