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Home / Business / $1b Sukuk bonds at 6.75%: Russia offers $2b credit, govt to divest 26% equity in PSM: Dar
$1b Sukuk bonds at 6.75%: Russia offers $2b credit, govt to divest 26% equity in PSM: Dar

$1b Sukuk bonds at 6.75%: Russia offers $2b credit, govt to divest 26% equity in PSM: Dar

ISLAMABAD: Finance Minister Ishaq Dar has reached back to Pakistan after successful launch of $1b Sukuk bond in London at 6.75% interest rate for five years and attending the Pakistan-Russia Inter-Governmental Commission meeting in Moscow. Russia has also shown willingness for another state credit line of US$ one billion for PSM refurbishment. Dar said in Russia that Pakistan was working on disinvestment of 26% equity in Pak Steel Mills.

According to a statement issued by the Finance Ministry, the dollar-denominated Sukuk notes issued by the country were five times oversubscribed as there were offers worth $2.3 billion, but the government picked only $1bn.

It said the proceeds would go to the State Bank and an equivalent amount in rupees would be used for retirement of domestic debt, meaning there won’t be any increase in the overall debt.

The Pakistan-Russia IGC meeting was held on Nov 26-28. The minister is scheduled to share details of both events at a media interaction on Tuesday.

Earlier, Finance Minister Ishaq Dar while talking to prominent Russian TV channel Russia Today (RT) and other media here reiterated his proposal for upper capping of oil prices, helping underdeveloped and developing countries to effectively manage their oil bills which can have positive impact on their economies.

The Minister said, he had put forth this proposal earlier in 2008 at ADB meeting in Madrid and emphasized that there should be upper capping (ceiling price) so that oil prices are not raised unrealistically. Now when developing countries were importing/using much larger quantities of oil as compared to 2008, it would be convenient for them if there was a ceiling price fixed by the producers, the Minister said. He said undue surge in the oil prices nearly cripples middle level economies.

Regarding a question that in what directions interaction between Pak-Russian Banks may be enhanced, Ishaq Dar said in this era financial services have appeared as the most significant driver of economic growth. Thus there is need of opening of bank branches in each other countries to facilitate the private sector for exchanging and marketing of products in Russia as well as in Pakistan.

On a question specifically regarding Pak-Russia Inter-Governmental Commission meeting, the Minister said the third Session of the IGC on 26-28 November focused on enhancing cooperation in the fields of trade, commerce, investments, agriculture, energy etc. It carried forward the work of the previous sessions held in 2010 and 2012 and helped the two sides to explore the full potential of cooperation in various sectors. Pakistan and Russia continue to cooperate at various international fora and share common views on most international and global issues. There are no impediments in the relations between the two countries, the Minster said.

Meanwhile, Sergei Topor Gilka, General Director of Technopromexport, a major Russian state energy enterprise, called on the Finance Minister Mohammad Ishaq Dar in Moscow and expressed willingness to participate in various energy sector projects in Pakistan. The Minister welcomed the interest of Technopromexport Company in the construction of Diamir Bhasha Dam.

The senior executives of the Russian banAk VneshTorgovBank (VTB) also participated in the meeting and offered a credit line of US$ one billion for the energy projects in Pakistan. They also showed interest in visiting Pakistan soon for further financial transactions. Ishaq Dar suggested that in addition to the energy projects the bank should also participate in the projects in other fields. A delegation of another Russian public sector enterprise Tyazhpromexport, headed by its First Deputy Director General Maxim Shabala, also called on the Finance Minister and reiterated its interest in rehabilitation and refurbishment of Pakistan Steel Mills (PSM). Tyazhpromexport had built the PSM in early 1980s. Russia has also shown willingness for another state credit line of US$ one billion for PSM refurbishment.

The Minister told the delegation that the government of Pakistan was working on disinvestment of 26% equity in Pak Steel Mills, hence the company should acquire the equity instead of extending loan to the PSM.