BPC faces July crunch time

The Bangladesh Petroleum Corporation (BPC) is facing a big problem with managing its funding shortfall this month, as it takes a very small of amount of loan in line with the International Monetary Fund (IMF)-prescribed 'indicative target' (IT).
Operation of the BPC would face a big problem and there could be a fuel oil shortage in the country in the event of non-availability of the deficit fund to the tune of Tk 23.56 billion from the government in time to finance oil import, they said.
Presently, a limited amount of loan is being taken by the BPC in accordance with the IT that was imposed by the IMF last fiscal. The finance ministry directed the BPC to follow the IMF instruction then, they said
"It was said that time if the BPC took any loan in accordance with the IT from international agencies, the government would fund the entity's deficit amount. But the government did not keep the pledge," a source said.
In the fiscal year (FY) 2013-14, the BPC had taken US$ 2.2 billion in the form of short term credit from the International Islamic Trade Finance Corporation (ITFC) whereas a deal on about US$ 1.2 billion credit has been signed with the ITFC for the FY 2014-15. It is less than that of the last fiscal by US$ 1.0 billion.  
As a result, the cash-strapped BPC was facing a heavy liquidity pressure, the sources said.
About Tk 52.56 billion will be needed for the current month. Of the total amount, about US$ 392.79 million will be required against LC (letter of credit) prices of cargoes. The BPC owes US$ 132.43 million to the ITFC, US$ 101.44 million to syndication financiers. The BPC will have to pay Tk 3.50 billion on account of duty, VAT and processing fee of Eastern Refinery Limited, vessel fares and other fees, according to the BPC data.
The state entity estimated to sell fuel oil at Tk 29 billion in the current month. Thus the net deficit would be over Tk 23.56 billion, he said.
In the circumstances, the BPC would face a big problem with meeting the conditions on repayment to the ITFC, repayment of the syndication loan and clearing vessel fares, if it did not get the deficit amount of money from the government in time, another high official of the BPC told the FE Monday
On the other hand, the image of the government would also be tarnished, he said.
So, "We requested the government authorities concerned on July 10 last to provide over Tk 23.56 billion for keeping our oil import and supplies uninterrupted," he added.