BPC seeks govt approval to get BNP Paribas loan
Thursday, 6 December 2007
Shakhawat Hossain
The Bangladesh Petroleum Corporation (BPC) has sought approval from the Ministry of Finance (MoF) to get US$ 200-300 million credit from a European commercial bank to foot the petroleum products import bills, sources said.
The BNP Paribas, one of the major European banks, has agreed to extend the loan at an interest of 1.84 per cent per annum plus LIBOR on the condition that the government of Bangladesh would give sovereign guarantee on repayment.
Negotiations between the two parties on the loan and necessary conditions have already been completed, sources added.
The Bangladesh Bank recently agreed to lend $300 million for oil import by the BPC.
Sources said the existing local and foreign funding will not be enough for the BPC to foot the oil import bills worth no less then $2.6 billion in the current fiscal, about 17 per cent higher than that of the last fiscal.
The loss-making BPC that sells its products lower than the imported costs had to seek loan from the commercial bank in the last fiscal year.
It took credit worth $250 from StanChart in 2006-07 when the country's oil import bills soared to $2233 million compared to that of $1602 million in fiscal 2004-05.
A MoF official said the import payments on account of oil import bills rose by about 39.3 per cent during the three-year period between fiscal 2004-05 and fiscal 2006-07.
The growing oil import bills have been exerting extra pressures on the country's current account balance.
According to an Asian Development Bank (ADB) official, the BPC will incur losses to the tune of $800 million in the current fiscal if the government does not make upward adjustment of the prices of petroleum products.
The ADB, along with the country's development partners have long been suggesting upward adjustment of the petroleum products to maintain the fiscal discipline.
The Bangladesh Petroleum Corporation (BPC) has sought approval from the Ministry of Finance (MoF) to get US$ 200-300 million credit from a European commercial bank to foot the petroleum products import bills, sources said.
The BNP Paribas, one of the major European banks, has agreed to extend the loan at an interest of 1.84 per cent per annum plus LIBOR on the condition that the government of Bangladesh would give sovereign guarantee on repayment.
Negotiations between the two parties on the loan and necessary conditions have already been completed, sources added.
The Bangladesh Bank recently agreed to lend $300 million for oil import by the BPC.
Sources said the existing local and foreign funding will not be enough for the BPC to foot the oil import bills worth no less then $2.6 billion in the current fiscal, about 17 per cent higher than that of the last fiscal.
The loss-making BPC that sells its products lower than the imported costs had to seek loan from the commercial bank in the last fiscal year.
It took credit worth $250 from StanChart in 2006-07 when the country's oil import bills soared to $2233 million compared to that of $1602 million in fiscal 2004-05.
A MoF official said the import payments on account of oil import bills rose by about 39.3 per cent during the three-year period between fiscal 2004-05 and fiscal 2006-07.
The growing oil import bills have been exerting extra pressures on the country's current account balance.
According to an Asian Development Bank (ADB) official, the BPC will incur losses to the tune of $800 million in the current fiscal if the government does not make upward adjustment of the prices of petroleum products.
The ADB, along with the country's development partners have long been suggesting upward adjustment of the petroleum products to maintain the fiscal discipline.