BPC unlikely to extend deferred payment scheme with Petronas

FE Team | Published: October 01, 2012 00:00:00 | Updated: February 01, 2018 00:00:00

M Azizur Rahman
State-owned Bangladesh Petroleum Corporation (BPC) is unlikely to extend the existing deferred payment scheme with Malaysia's state-owned Petronas for its refined oil product purchases, a top government official said Saturday.
"We have decided not to extend the deferred payment scheme with Petco as it is not willing to lower the existing interest rate," BPC Chairman Md Abu Bakar Siddique told the FE.
Currently BPC has a deferred payment scheme worth around US$ 1.0 billion with Petco, which will expire today (Sunday).
The BPC has, however, decided to extend deferred payment scheme with another supplier, the Philippines National Oil Company (PNOC) for one more year as it has lowered the interest rate, he said.
BPC in September last year entered into its first-ever deferred payment scheme with Petco, the trading arm of Petronas, and PNOC against fuel oil purchase when it was in dire financial crisis.
The interest rate of the deferred payment scheme was then set at around 5.05 per cent per annum.
The PNOC has offered recently a cut in the interest rate to 4.70 per cent from the previous rate of 5.05 per cent against the deferred payment scheme, he said.
"We have forwarded PNOC's proposal to the energy division of the Ministry of Power, Energy and Mineral Resources for approval," Siddique said.
BPC's total import cost of oil products from Petco and PNOC during October 2011 to September 2012 has been estimated at around $1.0 billion and $450 million respectively.
BPC's purchases from Petco and PNOC included diesel, jet fuel, kerosene, furnace oil and octane, said the BPC official.
BPC purchases the oil products from international market and sells those at lower prices in the domestic market.
It borrows from various agencies and banks with major contributions from the Islamic Development Bank, to pay for its imports.
BPC also gets fiscal support as subsidy from government exchequer at an annual interest rate of 3.0 per cent and the rest it arranges from sale proceeds.
Separately BPC has sought to include state-owned Rupali Bank in its existing list of lenders as it requires more funds to pay for its oil imports this year.
It wrote to the Energy Division of the Ministry of Power, Energy and Mineral Resources and the Ministry of Finance last week seeking an annual payment limit, a guarantee of credit worth Taka 15 billion from Rupali Bank.
Currently three state-run commercial banks -- Sonali Bank, Janata Bank and Agrani Bank -- stand as guarantor on behalf of the government and provide loans worth Taka 145 billion per year.
The corporation has projected to import about 5.9 million tonnes of crude oil and refined products in the fiscal 2012-13, up 11.3 per cent from imports of 5.3 million tonnes the year before.
The company's import bill in the current fiscal year is estimated at about $5.5 billion, up 14.6 per cent from the previous year's estimated $4.8 billion.
In the fiscal year ending June 2013, BPC is planning to import 1.4 million tonnes of crude oil, 3 million tonnes of diesel, 1.2 million tonnes of furnace oil and a combined 300,000 tonnes of kerosene, jet fuel and octane, said a BPC official.
The company currently has term deals in place until December 2012 to import refined oil products from Kuwait Petroleum Corp.; Petco: the Philippines National Oil Company; Emirates National Oil Company; Egypt's Middle East Oil Refinery; the Maldives National Oil Company; state-owned PetroChina and Indonesia's Bumi Siak Pusako.
It also has deals in place to import crude oil from Saudi Aramco and the Abu Dhabi National Oil Company until December 2012.