Energy ministry seeks $300m BB credit to foot oil import bills

Siddique Islam | Published: August 26, 2008 00:00:00 | Updated: February 01, 2018 00:00:00

The Energy Ministry has sought US$300 million fresh credit from the central bank through the three state-owned commercial banks to finance import of petroleum products by the Bangladesh Petroleum Corporation (BPC).

"We have requested the Bangladesh Bank (BB) to provide the loan as soon as possible for financing the import of petroleum products by BPC," Secretary of the Ministry of Power, Energy and Mineral Resources Mohammad Mohsin told the FE Monday.

He also said the ministry sought the credit support from the central bank in the form of revolving fund to foot the fuel oil import bills.

In 2007, the central bank provided $300 million credit support for the first time to three SCBs, formally known as nationalised commercial banks (NCBs) - Sonali, Janata and Agrani - for a six-month period.

The SCBs have already repaid the loan to BB within the stipulated timeframe but mostly in local currency instead of foreign currency, officials said.

"We have received a proposal from the energy ministry seeking $300 million fresh loan to settle petroleum products import payments," a BB senior official told the FE.

He also said the central bank is now examining the proposal for a fresh credit support to the state-owned commercial banks as before.

"We are, through different mechanisms, continuously providing foreign exchange support to the banks, particularly the SCBs, to clear gasoline products import bills," he added.

Currently, the central bank is offering overdraft (OD) facilities to the SCBs mainly for making import payments of essential items, including petroleum products, food grains and fertiliser.

The state-owned BPC has been facing huge losses due to mismatch between selling and purchasing prices of the fuel. It has been selling fuel at a price lower than its import cost.

The state-owned enterprise that was once a profitable entity suffered losses worth around Tk 65 billion in fiscal 2007-08.