Riyadh bailout package for energy starved Islamabad

In the recently concluded elections in Pakistan, Mian Mohammad Nawaz Sharif, chief of his own faction of Pakistan Muslim League (PML-N), emerged victorious to form a new coalition government for next five years, a record third time in country’s history, following his two brief stints in 1990 and 1997.

Yet, this cherished goal looks to be a bed of thorns for him because the country he is going to take over has been reeling under from a huge pile of crises, the worst of those is the acute energy shortage that almost suspended the economy by jamming the wheel of the industrial sector. Power load shedding made lives of Pakistanis hell as they had sleepless nights and were left in the summer heat without fans or air conditioners.

Eyes are also focused on Nawaz Sharif’s political rival and former cricketer Imran Khan, who might make history by becoming the leader of the opposition, the second biggest seat in the parliament. Imran is expected to play a positive role and stop political point scoring, for the time being, to bring much needed relief to the masses.

A Saudi bailout package

However, good news for the new government came as the Saudi government is likely to offer a bailout package for the Pakistani economy, in shape of supplying oil worth $15 billion. Riyadh also provided oil to Pakistan worth 190 billion rupees between 1998 and 2002, a big chunk of that was subsequently turned into grant.

The new government of Pakistan found additional good fortune when its old friend China also made an offer to help Islamabad overcome its energy crisis

Mansoor Jafar

A high-ranking Pakistani official has divulged that Riyadh is taking keen interest in helping Pakistan overcome its present multiple economic crises. Saudi Arabian ambassador to Islamabad, Abdul Aziz al-Ghadeer, who phoned Nawaz Sharif soon after his party’s electoral victory, was later briefed by the Foreign Office about country’s oil requirements, upon his desire, the official said.

Pakistan expects to receive one hundred thousand barrels of crude oil and fifteen thousand tons of furnace oil from Riyadh daily for the next three years under the bailout package which, if used wisely, could revive the industrial sector and overcome the energy crisis. The official said Riyadh had already accepted Pakistan’s formal request for supplying those quantities of oil, made out to Saudi Arabia’s joint ministerial commission recently.


Riyadh did not take interest in helping out Pakistan during the just concluded five-year tenure of the PPP because of cold relations with the government, the official added. Nawaz Sharif is expected to visit Saudi Arabia one month after taking oath as prime minister to discuss other details of the oil supply agreement.

Good fortune from China

Besides the Saudi bailout package, the new government of PML-N found additional good fortune when Pakistan’s old friend China also made a similar offer to help Islamabad overcome its energy crisis. Chinese Prime Minister Li Keqiang, who visited Pakistan this week, offered to assist Pakistan in developing energy resources in the country.

Though Li Keqiang visited India before coming to Pakistan, he offered to establish an economic zone in Pakistan to help the countries of the region, especially the central Asian states.

By the economic zone, Mr. Keqiang probably referred to Gwadar port, since he specified that Pakistan could benefit from that zone economically. China was recently handed over the control of Gwadar port, which is supposed to connect one of world’s major trade and oil supply routes; the Arabian Sea and Persian Gulf, to the central Asian States.

It is why the whole world, particularly India, raised eyebrows on China’s taking over the Gwadar port. To counter China’s taking over Gwadar, India has made a plan to develop the Iranian port of Chah Bahar, 80 kilometers west of Gwadar, as a major port which could be an alternative to Gwadar. With a huge presence of the Indian army and contractors in Afghanistan, this plan of developing Chah Bahar could give India easy access to the Persian Gulf, and reveals Indian expansionist designs in the region.

Regional politics

The bottom line of Afghan president Hamid Karzai’s recent visit to Delhi was to seek Indian cooperation to counter the likely resumption in Islamabad’s role in regional politics after the U.S. withdrawal from his country. The besieged Karzai, who seeks re-election after his term will expire next year, has been accusing Pakistan of sponsoring terror in Afghanistan, but Islamabad ignored his outbursts in the election fury.

It will be a wise thing for Pakistan’s new government to exploit the offers of Saudi Arabia and China to overcome its economic crunch. A Saudi bailout package would also provide Pakistan new leverage to determine the rate of gas it would be importing from Iran in the near future. Though canceling the gas import deal from Iran would not be a workable option for Pakistan, in view of the international guarantees, and Riyadh would also not like that.

Nawaz Sharif is expected not to repeat his past mistakes, like that of freezing foreign currency accounts on the night he made world history by detonating nuclear devices to declare his country as the first Muslim nuclear power on May 28, 1998 . Sharif, who carries a legacy of ruining the majority regimes, must act wisely or he will ruin what appears to be his last chance as Pakistani premier.

 

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Mansoor Jafar is Editor of Al Arabiya Urdu based in Islamabad. He can be reached via Twitter: @mansoorjafar

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Last Update: Wednesday, 20 May 2020 KSA 09:41 - GMT 06:41
Disclaimer: Views expressed by writers in this section are their own and do not reflect Al Arabiya English's point-of-view.
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