A representative for the petroleum division of the energy ministry responded to inquiries by saying that Pakistan’s first shipment of Russian oil will arrive within a month and was acquired at a discount. Pakistan is eager to use the Chinese Yuan to pay for further Russian oil imports.
According to Pakistan’s electricity minister, the nation has placed an order for a single shipment of Russian oil but is interested in a long-term agreement to purchase the petroleum in Chinese currency.
Given that the country has a currency exchange agreement with China, Pakistan would prefer that future purchases be paid in yuan, Minister Khurram Dastgir Khan stated in an interview late last week. The initial shipment’s payment was made in US dollars.
“We hope that if this becomes a long-term arrangement, it’ll become a rupee and Chinese currency transaction,” the man stated. And perhaps we need to increase the size of that currency exchange in order to seize any more possibilities that might present themselves.
Such a pact would be compatible with China’s goals to take the yuan worldwide in order to challenge the dominance of the dollar and Russia’s wish to stop using the dollar or euros for exports. It would also provide some relief for Pakistan, which is attempting to restart a delayed $6.5 billion bailout deal with the International Monetary Fund in order to avoid a default and is largely dependent on oil imports.
A representative for the petroleum division of the energy ministry responded to inquiries by saying that Pakistan’s first shipment of Russian crude oil will arrive within a month and was acquired at a discount.
The main consumers of Russian oil, China and India, are increasingly paying for supplies with yuan, rubles, or UAE dirhams. Although it’s unclear if Indian refineries have been utilizing rupees, Sergei Lavrov, the foreign minister of Russia, said last month that the Kremlin had too many rupees it couldn’t utilize.
Despite still being extremely small in comparison to the dollar, the usage of the yuan in international trade seems to be growing. Suzano SA, a Brazilian company that makes hardwood pulp, is considering exporting its goods to China in yuan, while Bangladesh and Russia recently agreed to settle a $300 million payment connected to the construction of a nuclear reactor close to Dhaka in renminbi, according to sources with knowledge of the situation.
For over six months now, Pakistan has been attempting to reopen bailout discussions with the IMF. Petroleum Minister Musadik Malik said in a Bloomberg TV interview on Tuesday that the international lender has voiced concerns over a plan to boost fuel prices for the rich to pay a subsidy for people on lower incomes.
According to Minister Khan, the South Asian country’s energy problem isn’t as bad as it was last year because of a decreased demand for electricity brought on by relatively chilly weather and higher power costs. With Pakistan now able to create more energy from oil it has recently stockpiled and with extra coal generating coming online, the government is in a stronger position ahead of peak demand throughout the summer, he added.
