Fuel supplies look challenging for LC payment backlog

Maintaining smooth supply of petroleum products looks challenging for LC payment backlog against the fuel imports amid forex crunch, sources said.
State-run Sonali Bank PLC is also reluctant to open letter of credit (LC) besides clearing dues against imports made by Bangladesh Petroleum Corporation (BPC), they said.
Currently, there remain BPC dues with the bank the value of which is around $139.71 million, as of September 08.
Chairman BPC Md. Amin Ul Ahsan recently wrote to the state-owned bank take requisite action for making payment as early as possible.

In the letter he says, "If any problem arises about fuel oils in future, Sonali Bank will have to bear that responsibility."
When contacted, the BPC chairman, Mr Ahsan, said, "We have requested the Sonali Bank to open LCs and to make payment of long-pending dues. It is one kind of reminding. Currently, there remains pending dues with different state-run banks, including Sonali Bank, value of which is around $296.73 million until September 08. The dues are to various supplier firms which supply petroleum items to the BPC."
To import fuel oils, BPC has to open 16-17 LCs for refined fuel oils every month on average. Each LC costs on average around US$ 26-30 million. LCs are opened through Sonali Bank Plc, Janata Bank Plc, Agrani Bank Plc and Rupali Bank Plc, but Sonali Bank has expressed its inability to open LCs since last June, according to the BPC.
The letter mentions that in the past, some 4-5 LCs used to be opened by Sonali Bank in a month, but BPC's LCs have stopped since June 2024. Besides, the bank is not making payment of the import prices receivable against the LCs previously opened in Sonali Bank on time.
The officials of the BPC in different levels are communicating over phone to officials concerned of Sonali Bank daily. But there is no solution, reads the letter.
The delay in payment of dues to various suppliers to Sonali Bank has crossed from 45 days to a maximum of 130 days. As such, different supplier firms are deferring and cancelling  some cargoes due to nonpayment of fuel prices on time, the corporation mentions in the letter.
Moreover, cargos arriving at Chittagong seaport's outer anchorage in specified LAY-CAN are delaying the release by imposing 'Financial Hold'.
The letter concludes it is not comprehensible why LCs are not being opened for the essential energy products for the country and not taking necessary steps to make payment by Sonali Bank.
Contacted over the conundrum, Chief Executive Officer of Sonali Bank Md. Afzal Karim said, "Sonali Bank has to make payment of all government's large payments. We are trying our best to make due payment and to open LCs for BPC on a priority basis as the BPC is a sate entity."
Payment sources are mainly remittances and corresponding banks. But, currently, demand for forex is higher than supply, he adds.
The BPC is engaged in the import and marketing of essential fuels for the country. At present, the corporation imports fuel oils through state-owned banks on a priority basis and supplies to the entire country at government-set prices.
The BPC generally imports diesel, jet fuel, furnace oil and octane for next year.
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