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Pakistan, Saudi Arabia to ink $1bn oil sector agreement

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  • Agreement expected to be signed in next few days.
  • Agreement to be signed through SDF.
  • SDF also directed to study augmenting KSA’s investments.

ISLAMABAD: Pakistan and Saudi Arabia are expected to ink an agreement of over $1 billion in the oil sector, through the Saudi Development Fund, a Saudi news channel said on Wednesday.

“The coming days will witness the signing of an agreement between the Kingdom and Pakistan through the Saudi Development Fund (SDF), with an increase of one billion dollars for oil derivatives,” Nawaf Al-Maliki, Saudi Arabia’s ambassador to Pakistan was quoted as saying by the Saudi Al-Khabaria channel.

The Saudi Press Agency (SPA) earlier in a report mentioned that Crown Prince and Prime Minister Prince Mohammed bin Salman bin Abdulaziz Al Saud has directed to study augmenting the Kingdom’s investments in Pakistan, which have previously been announced on August 25, 2022, and were slated to reach $10 billion.

The SPA said the crown prince also directed the Saudi Development Fund (SDF) to study increasing the amount of the deposit provided by Saudi Arabia in favour of the State Bank of Pakistan (SBP). This has been extended on December 2, 2022, to hit a $5 billion ceiling, the agency said.

The Saudi official news agency said that the move strengthened the Kingdom’s position to support the economy of Pakistan and support its people. 

The report pointed out that the move followed communication between the crown prince and Prime Minister Shehbaz Sharif.

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Pakistani stocks are rising, and the KSE-100 breaks the 69,000 barrier.

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The benchmark KSE-100 Index increased 1.76 percent on Monday, passing beyond the 69,000 barrier for the first time in its history. This maintained Pakistani stock market’s record-breaking run, as investors remained upbeat about potential rate cuts by the central bank.

The most recent advances also follow Prime Minister Shehbaz Sharif’s iftar dinner given by Saudi Crown Prince Mohammed bin Salman in Makkah, at a time when Riyadh is anticipated to announce an approximately $1 billion investment in Reko Diq, one of the world’s greatest reserves of copper and gold.

After reaching a high of 69,720.03, the KSE-100 Index concluded at 69,619.98 with a net gain of 1,203.20 points by the time trading was closed for the day. This was due to international investors, both individual and institutional, making purchases.

The meeting between Shehbaz and the Saudi crown prince, also referred to as MBS, may open doors for investment in a variety of industries, including mining, energy, and agriculture.

With record-high energy and interest rates driving up the cost of conducting business to an unaffordable level, investors are clamoring for foreign investment to prop up the economy.

Any improvement in this area would not only contribute to the rupee’s appreciation but also increase the value of cheap equities due to the anticipated purchasing frenzy, as buyers will not pass up the chance to purchase at the reduced prices.

However, there is a big question mark over the heightened expectations that the State Bank of Pakistan will begin reducing interest rates following the consumer price index (CPI) showing a steady fall in inflation over the past three months, particularly the greater than anticipated decline in March.

The reason is that, given Islamabad’s desperation to secure another package from the Washington-based lender, there is an impending hike in gasoline costs in addition to power and gas charges. This move will further sustain the inflationary pressure under the IMF criteria.

Meanwhile, the most recent US data has reduced expectations for potential rate reduction by the Federal Reserve, which is driving up the price of gold as speculative purchasing occurs.

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The price of gold is still rising in Pakistan.

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24 carat gold’s per tola pricing increased by Rs 600 on Monday, when it was sold for Rs 245,700 as opposed to Rs 245,100 the day before.

Ten grams of 24 carat gold cost Rs 514 more than the selling price of Rs 210,648; ten grams of 22 carat gold cost Rs 193,094 instead of Rs 192,622, according to the All Sindh Sarafa Jewellers Association.

Silver prices per tola and per ten grams stayed at Rs 2,650 and Rs 2271.94, respectively.

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According to the Association, the price of gold went up $5 to $2,355 on the global market from $2,350.

24 carat gold saw a rise in prices per tola on April 6 of Rs 4,900. It was sold on Saturday for Rs 245,100 as opposed to Rs 240,200 the day before.

The price of 10 grams of 24 carat gold went up by Rs4,200, and it was sold for Rs210,134 as opposed to Rs205,932. The price of 10 grams of 22 carat gold went up to Rs192,622 from Rs 188,772, according to the All Sindh Sarafa Jewellers Association.

Silver prices per tola and per ten grams stayed at Rs 2,650 and Rs 2271.94, respectively.

According to the Association, the price of gold went up $44 to $2,350 on the global market from $2,306.

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PIA privatization: “Investors from Saudi Arabia and Qatar are briefed by Pakistan.”

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According to information provided, investors in the aviation industry in Qatar, Abu Dhabi, and Saudi Arabia were approached and given a briefing on the privatization of PIA.

According to additional sources, investors received information about “profitable” investments in the international lines operated by FIA and PIA.

Since National Airline’s debts and losses were transferred to the withholding firm prior to privatization, all of them have been paid off.

According to the sources, every obstacle to the PIA’s privatization has been removed.

It is important to note that, as the government moves on with its privatization plan, up to three Gulf nations—the United Arab Emirates, Saudi Arabia, and Qatar—have expressed interest in purchasing the financially troubled Pakistan International Airlines (PIA), according to sources.

Previously, purchasers were asked to submit proposals by May 3 for the privatization of Pakistan International Airlines (PIA).

The Pakistani government intends to sell 51 percent of the national flag carrier’s shares; the remaining 49 percent will be owned by the government. The government’s goal is to privatize solely the PIA’s aviation department.

According to the officials, the business that purchases the 51 percent of the shares would continue to hold administrative authority over PIA.

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