Energy Div urges BB to arrange extra $300m fund for oil import

FE Team | Published: October 02, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

Shakhawat Hossain
The Energy Division has urged the central bank for arranging an additional amount of US$300 million for uninterrupted import of petroleum products in the current fiscal, official sources said.
Energy Division Secretary ANM Nasiruddin said his ministry has intimated the central bank about the fund requirement, but it will make a formal request about actual amount of foreign exchange in about two months time for import of oil by the Bangladesh Petroleum Corporation (BPC).
The Bangladesh Bank (BB) has already provided $300 million to the BPC for oil imports.
But the secretary admitted that the move had been made against the backdrop of the recent petroleum price-hike in the international market.
"Within the next couple months, the Energy Division will have a clear idea about the requirement of additional money," he said, adding that it would much depend on response from the Islamic Development Bank (IDB).
But unlike in the previous occasion, the central bank might not come up with the additional financial assistance to bail the BPC out of a possible crisis due to technical reasons, sources said.
Sources said the central bank officials have already studied such an Energy Division proposal and viewed that offering such additional financial assistance would put pressure on the foreign exchange reserve position now at $5.0 billion, which is regarded as comfortable.
The Energy Division secretary expressed the hope that the IDB, which finances Bangladesh's oil imports, will lend more than $ 1.0 billion.
Last fiscal year, the IDB provided $1.0 billion to the BPC that was forced to take loan worth $250 million from a foreign bank operating in the country at a high rate of interest.
With the energy division initially estimating some $2.5 billion requirement for the purpose of oil import in the current fiscal, it is now in doubt whether the amount will be sufficient to meet the requirement, the secretary feared.
The BPC that incurred losses worth some Tk 3.77 billion in the first two months of the current fiscal due to selling oil products at a price lower than that of import owed nearly Tk 75 billion to the state-owned commercial banks.
Although the government has taken the entire liabilities of Tk 75 billion of the BPC through issuance of bonds, it is still in an uncomfortable position to foot the fuel oil purchase bills.
Besides, the government might drop a plan to raise fuel prices due to inflationary pressures and the recent floods that have badly affected the economy.
According to an official estimate, the BPC may incur losses to the tune of Tk 13.0 billion by the end of this fiscal.
It incurred a loss of Tk 24.45 billion last fiscal.
The BPC that imports nearly 3.8 million tonnes of fuel from different oil-rich countries used to import petroleum products with its own resources.