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FBCCI seeks loan rescheduling for LPG industry up to 12 years

FE REPORT | March 19, 2023 00:00:00

To aid the struggling Liquefied Petroleum Gas (LPG) sector, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has appealed to the finance ministry for a debt restructuring and rescheduling facility of up to 12 years.

Citing a range of challenges, including the Covid-19 pandemic, the Russia-Ukraine war, global economic uncertainties, and a greenback crunch in the local market, the FBCCI is seeking the relaxed repayment of existing bank loans by five key LPG companies, shows a letter by the apex trade body to the ministry.

The firms are Padma Liquefied Petroleum Gas (LPG) Limited, Universal Gas & Gas Cylinder Ltd, SL Karnafully LP Gas Ltd, JMI Industrial Gas Ltd and Green Town LP Gas Ltd.

Debt restructuring is changing the terms of the loan, while loan rescheduling is one such change. Loan rescheduling typically entails extending the payment period and adding the number of instalments, which essentially increases the tenure of the loan facility.

The FBCCI says without access to a long-term relaxed repayment, the LPG companies will face severe difficulties, putting the entire industry comprising a total of 30 LPG firms at risk.

According to the FBCCI letter, LPG is a vital energy source in Bangladesh, with 98% of demand being met by private sector imports. The country's LPG industry is struggling to operate amidst a challenging environment, which includes fast fluctuations of the local currency Taka against the US dollar, volatile product prices in the global market, and foreign currency crises.

The LPG sector's working capital has been exhausted due to these challenging circumstances, resulting in a significant buildup of overdue loan liabilities for LPG companies, according to the FBCCI.

Without the restructuring of these loans, the FBCCI cautions that the LPG industry's entire investment, worth Tk 320 billion, could be in jeopardy.

The trade body believes that a long-term loan facility would enable the local LPG businesses to adjust their outstanding and overdue liabilities, reducing the risk of a financial collapse.

A finance ministry official confirmed receipt of the FBCCI's request letter, as the trade body hopes that the authorities will take the necessary steps to support the struggling LPG sector.

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