Dhaka has requested further financial assistance from Beijing to procure two additional ocean-going vessels, according to sources familiar with the discussions.
The move comes after rising shipbuilding costs forced the Bangladesh Shipping Corporation (BSC) to scale back its original plan to buy six ships with a previously secured Chinese loan.
The authorities made the additional financing request during a recent visit by a delegation from the China International Development Cooperation Agency (CIDCA). China reportedly responded positively and asked Bangladesh to submit a formal proposal.
China had previously approved a loan for Bangladesh to buy ships. However, the BSC originally planned to buy six ships with the 2020 loan. Rising machinery prices and delays due to Covid-19 restrictions forced them to reduce the number to four.
"Due to Covid restrictions, both parties suspended normal activities for more than a year," the BSC explained. "Negotiations on specifications finalised in 2019-2020 are no longer adequate to cover the construction cost of six vessels now."
According to shipping officials, seeking to maintain momentum and capitalise on anticipated growth in foreign trade, Bangladesh is proposing to China that the additional financing allow for the purchase of two more ships at the previously negotiated prices.
The ship procurement project intends to enlarge the BSC fleet and capture a bigger share of the shipping business. This, according to Bangladesh Shipping Corporation Chairman Commodore Mahmudul Malek, is expected to help save the country's foreign currency reserves.
The four ships currently under final-stage negotiation include two crude-oil tankers and two bulk carriers.
In April 2023, the Executive Committee of the National Economic Council (ECNEC) approved the proposal for these four vessels, with a total price tag of CNY/RMB 1.67654 billion.
The unit price for crude oil mother tanker was estimated at CNY/RMB 526.53 million, while it was CNY/RMB 311.74 million for mother bulk carriers
This ECNEC nod followed approval from the Cabinet Committee on Government Purchase to secure the vessels within the negotiated price range.
When China asked Bangladesh why the previous loan was not enough to buy six ships, the BSC replied that the original loan amount of CNY/RMB 1.768 billion approved by the Chinese government was not sufficient. This was because the total price for the four vessels already under negotiation came to CNY/RMB 1.67654 billion.
Therefore, the BSC chose to buy four vessels to stay within the original loan amount.
Currently, the BSC has no crude-oil tanker in its fleet, having sold its only one the 'Banglar Noor' in 1982.
mirmostafiz@yahoo.com