Bangladesh Petroleum Corporation (BPC) has sought a government guarantee to take US$125 in loans from Jeddah-based International Islamic Trade Finance Corporation (ITFC) to import fuel oil, officials have said.
The loan will be taken under the ITFC's Syndicated Murabaha Operation, having an interest rate of 6 months SOFR plus 2.0 per cent interest rate, including an administration fee.
The ITFC provides two types of loans to BPC - one is Direct Murabaha Operation and the other is Syndicated Murabaha Operation.
The standing committee on non-concessional loans at a meeting in May 2023 had approved some $1.4 billion loans from the ITFC for the fiscal year 2023-24 to finance Bangladesh's fuel oil imports.
From the approved loans, so far until fifth operations, some $750 million was released to import fuel oils.
Bangladesh signed a Master Murabaha Agreement with ITFC back in June 2009 which was renewed consistently every year.
To make the $125 million loan effective, the central bank will have to issue a guarantee against the counter guarantee issued by the Ministry of Finance.
Moreover, the secretary of the energy and mineral resources division will have to sign the facility terms sheet and submit it to the ITFC to get the loan, since the proposed $125 million loan is a new Direct Murabaha Operation, according to a BPC letter.
Also, some $125,000 will have to be paid as 0.20 per cent of total loan as administration fees including $62,500 to be paid before the loan becomes effective and the rest to be paid after the fund is used and the repayment begins.
Contacted, a senior finance ministry official told the FE on Wednesday that they were working on providing the counter-guarantee so that the central bank issues a guarantee to make the loan effective.
syful-islam@outlook.com