BB may provide $300m to BPC for importing fuel oils
Saturday, 25 August 2007
Doulot Akter Mala
The Bangladesh Bank (BB) is likely to provide US$ 300 million loan to the state-owned Bangladesh Petroleum Corporation (BPC) for financing fuel oil imports.
Three nationalised commercial banks (NCB) -- Janata, Sonali and Agrani will get US$ 100 million each from the BB to extend the same to BPC as loan for importing fuel oils.
The NCBs will repay the loans to BB after realising the amounts from the BPC.
The NCBs, last year, stopped providing loans to the BPC due to its failure to repay loans worth Tk 100 billion.
"The NCBs along with energy ministry and the BB have been conducting a series of meetings to materialise the deal within the coming week," a central bank source said.
The BB is actively considering to provide the fund to the BPC in view of its healthy foreign exchange reserve and the fund problem facing the BPC, sources said.
In the first two months of the current fiscal, the BPC incurred a loss 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 of loss continued, the cumulative loss would stand at nearly Tk 13.0 billion by the end of this fiscal.
When contacted, the energy secretary ANM Nasiruddin said: "We had sought US$ 300 million from the BB for importing fuel oil with local financing rather than depending on the foreign banks."
The energy and mineral resources division (EMRD) has received green signal from the central bank about sanction of fresh fund for oil purchase, he said.
It is better to take loans from the local banks instead of foreign banks, that charge higher rate of interest for its credit, he said.
The energy secretary said: "In order to retain the interest amount of the loans in the country, we have decided to take loans from the NCBs."
The BPC has been importing fuel with loans from the foreign banks -- Islamic Development Bank (IDB) and the Standard Chartered Bank (SCB) for sometime.
Last year, the BPC took loans worth more than $250 million from the SCB at high rate of interest.
The BPC owes nearly Tk 45 billion to the foreign banks against fuel oil imports.
In the current fiscal budget, the government has taken the entire liabilities to the tune of Tk 75 billion of the BPC by issuance of bond. But the government is still in an awkward position to foot the fuel oil purchase bills despite taking the liabilities of BPC with the NCB's.
The BPC has been facing huge losses due to mismatch between selling and purchasing prices of fuel. It has been selling fuel at a lower price than that of its import.
Besides, the government had to drop the plan of fuel price hike due to inflationary pressures and the recent flood that left a trail of devatstation.
The chronic loss of the BPC could have been minimised had the price been increased in line with the international market.
The BPC, that was once a profitable entity, incurred a loss of Tk 24.45 billion last year.
The BPC imports nearly 3.8 million tonnes of fuel from different oil-rich countries.
The BPC, earlier used to import petroleum products with its own resources but it has been facing a severe liquidity crisis for the last few years.
The Bangladesh Bank (BB) is likely to provide US$ 300 million loan to the state-owned Bangladesh Petroleum Corporation (BPC) for financing fuel oil imports.
Three nationalised commercial banks (NCB) -- Janata, Sonali and Agrani will get US$ 100 million each from the BB to extend the same to BPC as loan for importing fuel oils.
The NCBs will repay the loans to BB after realising the amounts from the BPC.
The NCBs, last year, stopped providing loans to the BPC due to its failure to repay loans worth Tk 100 billion.
"The NCBs along with energy ministry and the BB have been conducting a series of meetings to materialise the deal within the coming week," a central bank source said.
The BB is actively considering to provide the fund to the BPC in view of its healthy foreign exchange reserve and the fund problem facing the BPC, sources said.
In the first two months of the current fiscal, the BPC incurred a loss 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 of loss continued, the cumulative loss would stand at nearly Tk 13.0 billion by the end of this fiscal.
When contacted, the energy secretary ANM Nasiruddin said: "We had sought US$ 300 million from the BB for importing fuel oil with local financing rather than depending on the foreign banks."
The energy and mineral resources division (EMRD) has received green signal from the central bank about sanction of fresh fund for oil purchase, he said.
It is better to take loans from the local banks instead of foreign banks, that charge higher rate of interest for its credit, he said.
The energy secretary said: "In order to retain the interest amount of the loans in the country, we have decided to take loans from the NCBs."
The BPC has been importing fuel with loans from the foreign banks -- Islamic Development Bank (IDB) and the Standard Chartered Bank (SCB) for sometime.
Last year, the BPC took loans worth more than $250 million from the SCB at high rate of interest.
The BPC owes nearly Tk 45 billion to the foreign banks against fuel oil imports.
In the current fiscal budget, the government has taken the entire liabilities to the tune of Tk 75 billion of the BPC by issuance of bond. But the government is still in an awkward position to foot the fuel oil purchase bills despite taking the liabilities of BPC with the NCB's.
The BPC has been facing huge losses due to mismatch between selling and purchasing prices of fuel. It has been selling fuel at a lower price than that of its import.
Besides, the government had to drop the plan of fuel price hike due to inflationary pressures and the recent flood that left a trail of devatstation.
The chronic loss of the BPC could have been minimised had the price been increased in line with the international market.
The BPC, that was once a profitable entity, incurred a loss of Tk 24.45 billion last year.
The BPC imports nearly 3.8 million tonnes of fuel from different oil-rich countries.
The BPC, earlier used to import petroleum products with its own resources but it has been facing a severe liquidity crisis for the last few years.