Though cash-rich for charging higher retail petroleum prices, Bangladesh Petroleum Corporation (BPC) seeks to borrow US$250 million in another tranche of costly credits from the International Islamic Trade Finance Corporation (ITFC) to import fuel oils, officials said Friday.
Despite a strong capital base amid seven-year-long profit making, the state-owned petroleum corporation has sought the additional credit from the ITFC, a member of the Islamic Development Bank, in addition to the currently assured $600-million loan, Energy and Mineral Resources Division (EMRD) officials said.
"The BPC has requested us to forward the borrowing-request letter to the Economic Relations Division (ERD) in a bid to confirm the loan. We are verifying its proposal. And then we will send it to the ERD," a senior EMRD official told the FE.
Beginning since the fiscal year 2014-15, the petroleum products marketer has garnered substantial profits till middle of this year from high-priced sales of the fuels to domestic consumers.
According to available information, the BPC has earned a massive Tk 400 billion worth of profit in last seven years through charging higher retail prices of octane, petrol, and other fuel oils on the domestic market than international-market rates.
Over the last few months, global oil prices have risen which made BPC's bucks backpedal again.
International-market rates have recently been boosted almost threefold to nearly $90 per barrel -- the highest price surge after 2014.
Amid the price upturn, the government Thursday increased diesel and kerosene prices by Tk 15 to Tk 80 per litre, which triggered protests, including a nationwide transport strike from Friday.
The BPC management claimed that they incurred Tk 7.27-billion losses last month (October) due to price mismatch between the import and the retail ones.
Another EMRD official, requesting anonymity, says since the BPC had started counting loss in their fuel-oil business amid the higher international-market prices, it wants to confirm additional $250-million loan from the ITFC for oil import.
He said that although ITFC funds are costly, the BPC prefers the loan to secure its fuel supply to the domestic market in the remaining period of the current FY2022.
Under an agreement, the BPC is borrowing $600 million at LIBOR plus 2.95-per cent interest from the ITFC.
One ERD official said they had already got BPC's loan-request copy. "But when the EMRD will request us for the loan on behalf of the BPC, we will proceed."
The EMRD official said the BPC under the deal with ITFC had already confirmed a $400-million credit and another $200 million as contingency funds (loan).
"Now it wants to borrow $250 million as oil prices on the international market are rising," he said.
"The BPC's confirmed $600 million loan is expected to be utilised for purchasing oil up to February this year. Then it may require another $250 million in loan for the remaining four months of the current FY2022."
The government exp-ects the demand for fuel oils to increase in 2022 as coronavirus vaccination continues in the country, in order for trade, industrial and tourism activities to roll on.
According to BPC, Bangladesh's demand for fuel oils was 6.595 million tonnes in the last FY2021 and 5.50 million tonnes in the previous FY2020.
It imports 92 per cent of the fuel oils from the overseas market and the rest 8.0 per cent is produced locally as spinoffs from different gas and oil plants.
In FY2020, the corporation deposited Tk 141.23 billion worth of funds as revenue (VAT, tax and other duties) with the government exchequer, BPC data show.
They say about 2.5 million tonnes of refined fuel oils have been imported from January to July in 2021. The BPC plans to import a total of 4.4 million tonnes of refined oils this calendar year (2021).
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