ISLAMABAD: Pakistan has sought $6 billion financial assistance package from the United Arab Emirates (UAE) in the shape of cash deposits and oil on deferred payments in an attempt to meet all its financing needs for the current fiscal year with the help of friendly countries.
“In case of an agreement, Prime Minister Imran Khan may fly to the Emirates after the upcoming visit of China,” highly placed government sources told The Express Tribune on Friday.
They said both the sides have covered significant ground during the ministerial-level talks held at the Prime Minister’s Office.
The UAE delegation was led by its Minister of State and Chief Executive Officer of Abu Dhabi National Oil Company Dr Sultan Aljaber.
The delegation visited Pakistan on the specific directions of the UAE Crown Prince Sheikh Mohamed bin Zayed Al-Nahyan with whom the prime minister met on September 19 in Abu Dhabi and agreed to strengthen economic, trade and investment relations.
“The UAE is a very dear friend and has always helped Pakistan,” said Minister for Information and Broadcasting Fawad Chaudhry while talking to The Express Tribune.
He did not divulge the details of the possible assistance package but said both the countries have had fruitful discussions.
The UAE and Pakistan also agreed to resolve a decade-old dispute over $800 million outstanding payments that Etisalat owed to Pakistan on account of privatisation dues of the Pakistan Telecommunication Limited (PTCL).
The financial assistance has been sought on the Saudi Arabian model. Last week, the kingdom agreed to place $3 billion with the State Bank of Pakistan and $3 billion worth oil on deferred payments facility.
The sources said Pakistan requested the UAE to place $5 billion interest-free deposits with the central bank in addition to giving $3 billion oil facility.
Minister for Foreign Affairs Shah Mehmood Qureshi, while addressing a news conference, also said Pakistan discussed with the UAE delegation the country’s requirement of oil on deferred payment in continuation of the recent agreement with Saudi Arabia.
“The import of petroleum products from the UAE is significantly higher than Saudi Arabia and we discussed various mechanisms that can provide maximum fiscal space to Pakistan,” said Qureshi.
Pakistan’s oil import is expected to peak to close to $18 billion in the current fiscal year due to increase in crude oil prices in the international markets.
This has contributed in exponential increase in the country’s external financing needs, which has left a financing gap of $12 billion.
Pakistan has already received from Saudi Arabia $6 billion commitments and now wants to fill the remaining gap with the help of the UAE and China.
The anticipated relief package from the UAE would strengthen Pakistan’s negotiating position during the upcoming talks with the International Monetary Fund (IMF).
Pakistan still needs the IMF umbrella to secure loans from the international creditors and floating Eurobonds at relatively competitive rates.
In his news conference, Qureshi said Pakistan and the UAE have agreed to enhance bilateral relations, including trade and investment, for the mutual benefit of the two countries.
He said the visiting high-level UAE delegation showed interest in investing in different sectors of Pakistan.
He said the UAE delegation also included representatives of Emaar, the UAE’s leading housing company. The minister said the Pakistani side talked about increasing exports of rice, fruit and vegetables to the Gulf state. Joint collaboration in food processing industries was also discussed, he added.
“We want to benefit from the UAE’s immense experience in water desalination sector,” he said, adding that the delegation also expressed interest in setting up a state of the art LNG terminal in Pakistan.
Etisalat CEO meets Umar
Etisalat Group Chief Operating Officer Abdul Raheem Al Nooryani met Finance Minister Asad Umar, who urged Al Nooryani to give time bound commitments to address the longstanding issue.
In return, the Etisalat delegation demanded Pakistan to restore Technical Services Agreement payments that Pakistan suspended few years ago in retaliation of non-payments of $800 million.The Etisalat has withheld payments on the pretext that Islamabad did not transfer all the PTCL properties.
But Pakistan served a second shortfall notice to Etisalat in September 2015, informing the company that it cannot transfer the remaining 33 properties and that it would have to pay the outstanding dues by adjusting the value of these properties.
According to Pakistan’s assessment, the value of these properties was not more than $88 million. But according to the agreement, the highest value determined by any of the two parties will be the final price of the properties.
In July 2005, Etisalat had bought 26% shares in the PTCL with management control at a price of $2.6 billion. After coming to know the second lowest bid was actually $1.4 billion, the UAE-based firm tried to backtrack from the offer.
Then privatisation minister Abdul Hafeez Shaikh lured the company by offering it to make an initial payment of $1.4 billion and the remaining amount in nine installments until September 2010. Moreover, he committed to transferring the properties owned by PTCL to Etisalat.