KARACHI: Pakistan yesterday signed a 30-millon-dollar loan agreement with the Soviet Union here for “cooperation in search and prospecting for oil”. Minister for Fuel, Power and Natural Resources Z.A. Bhutto, who led the country’s delegation to the USSR last December, and Soviet Ambassador in Pakistan Dr M.S. Kapitsa initialled on behalf of their respective Governments. The loan-agreement, the first between Pakistan and a communist country, was described by Mr Bhutto as “a clear evidence of Pakistan’s determination to exploit the country’s natural resources to the maximum extent”.

Dr Kapitsa said it was “an evidence of Soviet intentions”, and hoped that it would lead to closer economic and cultural cooperation between the two countries.

The loan is repayable in Pakistan rupees in 12 years. The rate of interest is two-and-a-half per cent. Russia is to utilise bulk of the rupee repayment for imports from Pakistan.

The project for oil exploration and the oil, when found, will be owned entirely by Pakistan.

Prospecting for oil will first begin in West Pakistan, which lies in close proximity with the oil-rich Middle East.

Mr Bhutto last night indicated that the organisation which the Government of Pakistan proposed for conducting the exploration would be set up within the next two months.

A Press communiqué issued by the government said: “The agreement provides for a loan of approximately 30 million dollars from the Government of USSR to the Government of Pakistan, repayable within 12 years at an interest of 2-1/2 per cent per annum. “This credit will be utilised by the Government of Pakistan for the purchase of equipment and material to be supplied from the USSR and for the salaries of technicians and specialists deputed by the Government of USSR for conducting geological and geophysical surveys and prospecting for oil in Pakistan. The prices for the equipment and material to be supplied to Pakistan under this agreement shall be fixed on the basis of world market prices.”