Govt to give Tk 75b to BPC to raise its paid-up capital

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Shakhawat Hossain
The government will provide Tk 75 billion to the Bangladesh Petroleum Corporation (BPC) to raise its paid-up capital before issuance of bond next month, official sources said.
The Ministry of Finance (MoF) at a meeting Sunday took the decision to expedite the government move to bring discipline in financial management of the loss-making state-owned corporation that imports and markets fuel oil in the local market.
The meeting also decided to ask the BPC to convert the budgetary assistance into equity so that it can attract investors when the bond is issued, sources added.
The amount of current paid-up capital of the BPC that owed local and overseas banks and the National Board of Revenue nearly Tk 140 billion could not be known.
A MoF official said the decisions of the meeting will be conveyed to the finance and planning adviser for his approval before the release of the fund and the launching of bond.
The entire procedure of issuance of bond, which can only be purchased by different government bodies at four per cent rate of return annually, may take one month, the official added.
The caretaker government has already earmarked a fund worth more than Tk 50 billion in current fiscal budget to take the liabilities of the loss-making BPC and establish transparency fiscal management.
But, despite all the government efforts, the BPC's financial burden or debt to the local and overseas banks will be reduced only to half of the total amount.
"By issuance of bond worth Tk 75 billion, the government is only clearing the BPC liabilities to the state-owned commercial banks," an energy division official said.
Almost the same amount of money, the BPC will owe to the Islamic Development Bank (IDB), the Standard Chartered Bank and the National Board of Revenue (NBR), he added.
The BPC has been getting loans from the IDB for importing fuel. It took loan worth more than US$ 250 million from the Standard Chartered Bank at high rate of interest last year and withheld payment of a substantial amount of import duty to the NBR.
The corporation faced difficulties in importing petroleum products during the last couple of years following steep price rise of fuel oil in the international market.
It faced huge losses due to sale of the products in the local market at lower than import prices. The amount of losses was worth more than Tk 50 billion during the last two fiscals.