BPC struggling hard to meet fuel import bills
Sunday, 17 February 2008
M Azizur Rahman
The country's lone state-owned oil importer is struggling to meet fuel import bills as it is becoming harder for them to arrange lenders, official sources said.
"The state-run Bangladesh Petroleum Corporation (BPC) has now financial arrangements of only $ 1.0 billion, one-third of its total requirement of $3.0 billion for the current fiscal," energy secretary Mohmmad Mohsin told the FE.
Apart from the $ 1.0 billion assurance that came from the Jeddah-based Islamic Development Bank (IDB), the corporation is yet to arrange any confirmed source for additional funding.
The apathy from the finance ministry and the central bank to provide funding to the cash-strapped corporation has worsened the BPC's lending prospects further, BPC officials said.
"We sought allocation of around Tk 60 billion ($900 million) from the finance ministry two months ago to meet the import bills but the ministry is yet to respond positively," BPC chairman Anwarul Karim said.
The corporation was refused $500 million it sought from the Bangladesh Bank (BB) two weeks ago, he said.
The BB last year arranged $300 million for the BPC from three state-owned commercial banks (SCBs) under special consideration.
The corporation is dependent solely on the lenders to meet import payments as it incurs huge losses from its sale of oil at lower prices in the domestic market after importing at high rates from the overheated international market.
"The corporation has already incurred a loss of over Tk 30 billion in the first seven months of the current fiscal because of the low fuel prices it supplies to the domestic market," the BPC chairman said.
The corporation is set to count a loss of over Tk 65 billion in the current fiscal if the current pricing continues, he added.
A French-bank - BNP Paribas - has recently shown interest to provide $250 million to the BPC.
The proposal is now being scrutinised by the finance ministry officials, the BPC sources said.
The corporation has also initiated talks with the Standard Chartered Bank (SCB) to get financial assistance amounting to $250 million.
In 2006, the SCB provided around $300 million to the BPC.
The accumulated fund arrangements including those of the already-confirmed IDB and the pipelined BNP Paribas and SCB stands at around $ 1.50 billion, having a shortfall of the same amount as required to import fuel for the current fiscal.
"The consequences in the dearth of lenders for the BPC might be horrible," energy secretary Mohsin said adding, "The issue should be considered in a rational way."
The corporation last year imported around 3.8 million tonnes of oil of which 1.2 millions are crude and 2.6 million tonnes are refined oil.
The country's lone state-owned oil importer is struggling to meet fuel import bills as it is becoming harder for them to arrange lenders, official sources said.
"The state-run Bangladesh Petroleum Corporation (BPC) has now financial arrangements of only $ 1.0 billion, one-third of its total requirement of $3.0 billion for the current fiscal," energy secretary Mohmmad Mohsin told the FE.
Apart from the $ 1.0 billion assurance that came from the Jeddah-based Islamic Development Bank (IDB), the corporation is yet to arrange any confirmed source for additional funding.
The apathy from the finance ministry and the central bank to provide funding to the cash-strapped corporation has worsened the BPC's lending prospects further, BPC officials said.
"We sought allocation of around Tk 60 billion ($900 million) from the finance ministry two months ago to meet the import bills but the ministry is yet to respond positively," BPC chairman Anwarul Karim said.
The corporation was refused $500 million it sought from the Bangladesh Bank (BB) two weeks ago, he said.
The BB last year arranged $300 million for the BPC from three state-owned commercial banks (SCBs) under special consideration.
The corporation is dependent solely on the lenders to meet import payments as it incurs huge losses from its sale of oil at lower prices in the domestic market after importing at high rates from the overheated international market.
"The corporation has already incurred a loss of over Tk 30 billion in the first seven months of the current fiscal because of the low fuel prices it supplies to the domestic market," the BPC chairman said.
The corporation is set to count a loss of over Tk 65 billion in the current fiscal if the current pricing continues, he added.
A French-bank - BNP Paribas - has recently shown interest to provide $250 million to the BPC.
The proposal is now being scrutinised by the finance ministry officials, the BPC sources said.
The corporation has also initiated talks with the Standard Chartered Bank (SCB) to get financial assistance amounting to $250 million.
In 2006, the SCB provided around $300 million to the BPC.
The accumulated fund arrangements including those of the already-confirmed IDB and the pipelined BNP Paribas and SCB stands at around $ 1.50 billion, having a shortfall of the same amount as required to import fuel for the current fiscal.
"The consequences in the dearth of lenders for the BPC might be horrible," energy secretary Mohsin said adding, "The issue should be considered in a rational way."
The corporation last year imported around 3.8 million tonnes of oil of which 1.2 millions are crude and 2.6 million tonnes are refined oil.