BPC secures addl $250m loan from IDB

M Azizur Rahman The cash-strapped Bangladesh Petroleum Corporation (BPC) has managed an additional US$250 million credit from the Islamic Development Bank (IDB) in the current Hijri calendar year to help it meet the ballooning import bills, a top official said Thursday. The International Islamic Trade Finance Corporation (ITFC), the lending arm of the IDB Group, is providing the loan, in addition to its previously committed $1.20 billion loan, BPC Chairman Muktadir Ali told the FE. The loan is earmarked for the current Hijri year, 1432, ending in late November 2011. With this additional $250 million assistance the IDB's total lending to the BPC in the Hijri year 1432 will reach $1.45 billion, said the BPC Chairman. The BPC got the fund, payable within one year, with a mark up rate of 5.30 per cent, at the same rate it has been currently getting fund from the IDB. The government's hard-term loan committee has already approved the additional loan from the ITFC. No new deal is required to get the fund, and Bangladesh government is the guarantor against the loan, he said. "We sought the additional fund to meet the mounting bills against import of oil products," Muktadir Ali said. He said the BPC will seek more funds from the IDB in the next Hijri year, 1433. The IDB has long been a development partner of Bangladesh. Apart from supporting the BPC in importing petroleum products, the IDB also provides funds to Bangladesh for other development works, including installation of power plants and infrastructure development. The BPC has recently finalised a deferred payment scheme of $775 million for purchasing refined oil products from Malaysia's state-owned Petronas and the Philippines National Oil Company for the period ranging from October 2011 to March 2012. In an unprecedented move the corporation also received a syndicated loan of $200 million from foreign banks and financial institutions last week to pay its oil import bills. The BPC has projected that it will require around Tk 460 billion ($6.21 billion) in the fiscal year 2011-12, a 53 per cent increase on year on year basis, as it will have to import more oil products to meet the domestic demand. It is likely to import around 6.50 million tonnes of oil products during the fiscal, up by 27.5 per cent on year on year basis. The organisation also projected that it would require government subsidy of Tk 225 billion in the fiscal, up by 181 per cent from the previous fiscal. The BPC purchases oil products from the international market and sells those at lower prices in the domestic market. It borrows from various agencies and banks, with major contribution from the IDB, to pay its import bills. Currently the BPC has oil import deals with KPC, Petco, PNOC, Emirates National Oil Company, Egypt's Middle East Oil Refinery, Maldives National Oil Company, PetroChina, Indonesia's Bumi Siak Pusako and Vietnam's National Petroleum Import-Export Corp.