NCBs to get credit support to help BPC finance import of fuel oils

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FE Report
The Bangladesh Bank (BB) has started processing its US$300 million credit support to state-owned commercial banks for financing import of petroleum products by Bangladesh Petroleum Corporation (BPC).
The central bank has initially agreed to provide such credit facility to the three nationalised commercial banks (NCBs) - Sonali, Janata and Agrani - to help the state-owned BPC finance import of fuel oils.
Agrani Bank has already submitted its loan proposal to the concerned department of the central bank for sanctioning it as early as possible, official sources said.
Sonali and Janata are likely to apply to the central bank seeking such loan facilities this week, sources in the banking sector said.
Agrani Bank has sought $100 million from the BB for one-year term to finance the oil import to meet the growing demand for gasoline in the country.
"We have already received application from the Agrani Bank in this connection. The application is now under active consideration," a BB senior official told the FE Saturday.
The central bank is now examining the terms and conditions for the new credit support to the state-owned commercial banks.
"Such credit support will continue if the NCBs utilise the loans effectively," the BB official noted.
Explaining the central bank's position, another BB senior official said the credit support will be a test case for the NCBs and its continuation will depend on their records of repayment.
The Ministry of Power, Energy and Mineral Resources earlier requested the central bank for taking measures to facilitate import of fuel oils.
In the first two months of the current fiscal, the BPC incurred a loss worth Tk 3.77 billion. Of the amount, Tk 1.60 billion was in June and Tk 2.17 billion in July.
Energy division sources feared that if such trend continued, the cumulative loss would stand at nearly Tk 13.0 billion by the end of this fiscal.
The 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 Tk 24.45 billion last year. It imports nearly 3.8 million tonnes of fuel from different oil-rich countries.