BPC seeks standing body\\\'s nod for $1.0b ITFC loan

Rezaul Karim
The government is set to import petroleum products under a US$ 1.0 billion loan support from ITFC (International Islamic Trade Finance Corporation) for the current calendar year (2015), officials said.
Bangladesh Petroleum Corporation (BPC) has sought approval of the ITFC loan from the Standing Committee on Non-Concessional Loan through the Ministry of Power, Energy & Mineral Resources (MoPEMR), they said.
A meeting was held between a high-powered Bangladesh delegation and ITFC in Jeddah of the Kingdom of Saudi Arabia (KSA) on February 02-03, 2015. The credit amount and rate of interest were fixed with the ITFC at the meeting. Tenure of the loan is six months and rate of interest is 4.2 per cent annually, they added.
The state-run BPC has sought an immediate approval of the loan to keep its fuel import and supply uninterrupted across the country, a senior BPC official said.
In 2013, BPC borrowed $ 2.2 billion from the ITFC to meet import costs of petroleum products. The amount was $ 2.6 billion in 2012.  
When contacted the BPC chairman (secretary in-charge) M A Badrudduja said: "We have sent a letter to the Standing Committee on Non-Concessional Loan seeking approval of $ 1.0 billion ITFC credit at a lower rate of interest; but no decision has so far been taken by the committee."
He said the corporation will import necessary petroleum products when the ITFC authority releases the credit.
There is no plan of the government to reduce the fuel prices now, he mentioned.
The profit of the BPC is gradually increasing for not adjusting fuel prices in the country in line with their prices in the international market, sources said.
The government had long been paying a large amount of subsidy every year because of the mismatch between procurement and domestic marketing of fuel oils. However, the corporation which was earlier cash-starved is now making profit.
In August last, the Standing Committee on Non-Concessional Loan of the government approved the deferred payment deal worth $ 300 million from PETCO-Malaysia, $ 250 million from Petro-China, $ 200 million from PNOC-Philippines and $ 150 million from UNIPEC-Singapore for 150 days with a 3.78 per cent annual interest rate for the fiscal year (FY), 2014-15, according to the BPC data.
"We are now making profit against sale of different fuel oils. If the price remains at this level, we will definitely make profit at the end of the FY," an official of BPC told the FE.
However, he said the BPC adopted the deferred payment mechanism to import petroleum products due to a significant amount of bills remaining outstanding with some organisations.
The entity borrows from various agencies and banks for this purpose including ITFC, the lending arm of Islamic Development Bank, and from international banks like HSBC, Standard Chartered and Citibank.
BPC has fixed a target to import 5.81 million tonnes of petroleum products this year, an increase of 7.50 per cent from that of the previous calendar year.
The BPC has finalised contracts to import around 3.60 million tonnes out of total requirement of refined petroleum products from different international suppliers.
The BPC has deals with the Kuwait Petroleum Corporation (KPC), Petco -- the trading arm of Malaysia's Petronas, the Emirates National Oil Company (ENOC), the Philippines National Oil Company (PNOC), the PetroChina, the Unipec Singapore Ltd, Vietnam's Petrolimex, Indonesia's PT Bumi Siak Pusako and Brunei's PB Trading to import refined petroleum products until December 2015.
General Manager (finance) of the BPC Moni Lal Das said the BPC has earned a net profit of around Tk 1.90 billion per month since October, 2014. The profit might increase further in the coming months as the present trend of oil prices in the global market has remained intact.
Out of the total $ 1.0 billion ITFC credit some $ 600 million will be required to import 1.2 million tonnes of crude petroleum by the credit and rest of the amount will be needed to import different refined petroleum products, he said.
The BPC owes more than Tk 170 billion to state-owned banks till date, he added.
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