IDB agrees to give loan to BPC at minimum interest rate

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FE Report
The government has initiated the process of getting the proposed US$ 200 million loan from Islamic Development Bank (IDB) for import of petroleum oil after the lender agreed on a minimum rate of interest, officials said Monday.
The IDB has already agreed to provide the loan at 1.75 per cent interest rate in addition to the LIBOR (London Interbank Offered Rate) as per the previous deal.
But the Jeddah-based multilateral lending agency had bargained for a minimum 5.5 per cent interest on the loan.
"The Bangladesh Petroleum Corporation (BPC) is expected to receive the amount of IDB loan shortly as we have started working on that following the Bank's green signal," a senior Energy Division official said.
The IDB, one of the BPC's prime financers, has already provided loans amounting to $ 661.50 million during the past months of the current fiscal, officials said.
They, however, mentioned that the corporation requires an additional US$ 452 million worth of fund for importing petroleum oil for the remaining months of this fiscal year.
The BPC has fixed the target of importing 3.8 million tonnes of petroleum oil - both refined and unrefined - to meet the country's demand for fuel.
Sources, however, said since the BPC has been sustaining huge losses on account of selling petroleum oil at much lower than its import costs and surging oil prices in the international market, the corporation requires additional fund from the donor to cope with its enhanced import bills.
Referring to official figures, they said the BPC's total cost for the import of petroleum oil could reach $ 4.5 billion for fiscal 2007-08 compared to $ 2.1 billion in the last fiscal year.
Due to its severe resource crisis, the BPC had to go for borrowing a $250-million worth of credit from the Standard Chartered Bank recently.