A meeting of the Economic Coordination Committee (ECC) of the cabinet presided over by Prime Minister Mohammed Mian Soomro approved the Rs20 billion syndicated loan with 10% interest. The loan will translate into about Rs28 billion at the time of repayment in five years.
Of the total, Rs15 billion will be paid to Pakistan State Oil (PSO) and Rs5 billion to Shell-Pakistan. The two companies hold about 80% share in Pakistan’s oil industry. The state-run PSO has more than 60% market share.
The Rs20 billion would be in addition to Rs12 billion paid to PSO and Rs6 billion to Shell last month on the same account.
The government has taken Rs38 billion loan which will translate into Rs52 billion at the time of payment. It means that the next government will have to pay an extra Rs14 billion in interest out of public money on loans totaling Rs38 billion.
The Petroleum ministry’s suggestion for an increase in oil prices from January 16 had divided the cabinet and no decision could be taken. The ministry had proposed 5%, 10% and 15% increase in prices of diesel and motor spirit.
Another meeting had been convened on Monday to discuss the ministry’s proposals.