BPC seeks Tk 63.65b to double stock of petroleum products

State-owned Bangladesh Petroleum Corporation (BPC) has sought Tk 63.65 billion (US$816 million) from the government to double its regular stock of petroleum products to ensure the country's energy security under the National Energy Policy (NEP), a top official said Tuesday.
"The BPC, in a letter to the Finance Division under the Ministry of Finance, sought to keep the country's overall stock of petroleum products to maintain the demand for 60 days," BPC Chairman Md Eunusur Rahman told the FE Tuesday.
The country's petroleum import and marketing monopoly has planned to keep petroleum stock of around 880,000 tonnes, crude and refined oil combined, to meet the country's overall petroleum requirements for two months.
Of the total, 550,000 metric tonnes would be refined petroleum products, which include diesel, furnace oil, jet fuel, kerosene and octane and 330,000 tonnes would be crude oil.
The NEP spells out that the country will have to maintain regular stock of petroleum products of 60 days, Mr Rahman said. The BPC never sought money from the government to maintain its regular stock of petroleum products from the government before, said the official.
It used to maintain around one month's stock through loans and sales proceeds of petroleum products.
But despite drastic fall of petroleum prices in international market, the capping of the loan amount at US$ 775 million by the International Monetary Fund (IMF) has pushed the for the BPC in quandary to maintain two months' storage of petroleum products, said a senior BPC official.
The BPC had to lower annual borrowing by 45.45 per cent to $1.2 billion from the International Islamic Trade Finance Corporation (ITFC), the lending arm of the Islamic Development Bank Group, in the outgoing year, in line with the IMF suggestion.
The IMF tagged the condition with release of its $982.5 million under the Extended Credit Facility (ECF) of the lender.
As per the IMF condition on indicative target, the BPC's external loan was up to $775 million till June 2014.
The BPC also has syndication loan with some multinational banks like HSBC, Standard Chartered and deferred payment schemes in place to fund fuel imports.
It also imports petroleum products under deferred payment schemes with several suppliers.
The BPC has set a target to import around 5.81 million tonnes of petroleum products, crude and refined oil products combined, in 2015, up 7.59 per cent from 2014, at a cost of around $5 billion.
"We shall have to undergo a tough challenge to arrange the fund to import increased quantity of petroleum products from the international market in 2015," the BPC official said preferring not to be quoted.
The government must have to provide the fund to the BPC consistently to foot the fuel import bills, he said.
Bangladesh is committed to implementation of several new measures under its deal with the IMF signed in April 2012.
In order to receive the total $987 million loan Bangladesh sought from the IMF under an ECF, the government is required to introduce a price reform for domestic oil products that would reflect international oil prices.
The IMF loan is being disbursed in seven equal tranches of around $141 million each, and could be repaid within 10 years with no interest charged.
Bangladesh already got several installments of loan under the ECF.
The BPC has already finalised contracts to import around 3.6 million metric tonnes of refined petroleum products from nine suppliers in the Middle East and Southeast Asia for 2015, Mr Rahman said.
This comprises around 1 million tonne (0.25 per cent) sulfur diesel, 1.4 million tonne (0.05 per cent) sulfur diesel, 850,000 tonnes of furnace oil with 3.5 per cent sulfur content, 320,000 tonnes of A-1 jet fuel, 25,000 tonnes of octance and 5,000 tonnes of kerosene.
The BPC has negotiated term deals with the Kuwait Petroleum Corporation (KPC), the 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 for until December 2015.
The BPC also expects to import around 1.4 million metric tonnes of crude oil from Saudi Aramco and Abu Dhabi National Oil Company in 2015.
    azizjst@yahoo.com