KARACHI, Oct 4: Pak-Arab Refinery Company (Parco) has paid $100 million instalment to a consortium of five banks of a $350 million plus rupee-dollar swap that the company had contracted with the consortium to clear a foreign debt ahead of schedule.

"The payment has been settled," confirmed a senior official of Parco when reached by Dawn over telephone. "The State Bank did provide dollars for this purpose," he added.

The central bank gave $100 million to state-run National Bank, also a member of the consortium, and that in turn sold it proportionately among all the members. The other four banks in the consortium included Habib Bank, United Bank, Muslim Commercial Bank and Standard Chartered.

"We now have to settle the last instalment (also of $100 million) on November 4," said the Parco official. Parco had sought Rs22 billion plus rupee loans from the above-named banks to clear a $350 million Japanese debt secured earlier to construct a refinery in Multan. But it was not allowed to buy ready dollars from banks out of this rupee loan to pre-pay the foreign debt and was instead asked to enter into rupee-dollar swap with the banks.

The company did, as advised by the central bank and entered into the swap with the banks which effectively led the banks to pre-pay the Japanese loan on behalf of Parco and required Parco to return dollars to these banks in four instalments.

Senior bankers said as the State Bank provided dollars through National Bank enabling Parco to clear the swap instalment on Monday; the rupee did not weaken despite such a big payment. It rather gained one paisa to close at 59.25 in the inter-bank market.