IDB to finance ERL modernisation, power plant at Bhola
Tuesday, 30 September 2008
Shakhawat Hossain
Finance and planning adviser Mirza Azizul Islam said Monday Islamic Development Bank (IDB) has agreed to finance modernisation of the country's aging lone oil refinery and a establishment of a 150 megawatt (MW) power plant.
The positive response came during a meeting held on September 24 between Dr Aziz and IDB president Dr. Ahmed Mohamed Ali in Jeddah.
"The IDB financial assistance for modernisation of the Eastern Refinery Ltd (ERL) in Chittagong is worth US$ 191 million and $96 for the Bhola power project," Dr Aziz told reporters on return home after performing Umrah.
Energy division secretary Mohammad Mohsin said IDB's commitment to lend $191 million for modernisation of the Eastern Refinery in Chittagong is encouraging.
The country has planned to treble the existing capacity of the Eastern Refinery to cut oil import.
"Due to oil price hike and limited capacity of the refinery the country's oil import bills surged to $3.2 billion in fiscal 2007-08 from $ 2.1 billion in the previous fiscal," he said.
The country, which imported 3.5- 3.8 million tonnes of oils to meet its annual requirement, has to bring in some 2.5 million tonnes of refined oils or 71 per cent of the total need.
The country's only refinery is capable of refining 1.0 million tonnes annually. The oil refinery in Chittagong has been in operation since 1967.
The energy division officials said the country could save significant amount of money if the capacity of the Eastern Refinery is raised as the price gap between per barrel refined and crude oil is at least $ 20 in the world market.
It will take at least three years to complete the modernisation of the refinery, they said.
Dr. Aziz said the Jeddah-based multilateral lending agency has also given assurance to finance two other projects including Teesta second barrage worth $177 million.
Besides, the finance adviser has urged the IDB to increase the amount of annual loan for the country's oil import bill and reduce its interest rate.
IBD provides $1.0 billion annually to finance oil import at 1.54 per cent interest rate.
The finance adviser said the deepening recession will have no major impact on the country's economy as local financial institutions have no direct links with the US-based financial institutions.
The US market is single largest export destination of Bangladesh's readymade garments (RMG) and frozen foods. About 30 per cent of the country's RMG export is shipped to the US market annually.
Dr Aziz, however, ruled out any adverse impact on the country's RMG export saying local RMG products are cheap and competitive, and these will remain within the buying capacity of the Americans.
The country exported goods worth $1.54 billion in July last, a new monthly record despite concern of the country's businessmen over the growth prospect due to economic meltdown in major economic powerhouses.
Dr Aziz said the caretaker government is working to leave behind sound economic conditions for the new elected government.
"We are improving the bilateral relation with other countries and trying to increase the inflow of remittance and export," he said.
UNB adds: The finance adviser said the country's economy, having no major stress at present, is unlikely to be affected largely due to the near recession in the United States and elsewhere.
"This is because we're mostly dependent on the multilateral donors, more than we're dependent on the bilateral donors," he told reporters at his planning ministry office.
Dr Aziz said the replenishment of foreign aid from the multilateral donors has not been declining, and these donors are unlikely to back out from their commitment.
He said the flow of aid from the bilateral donors would depend on how the economic recovery efforts affect their respective budgets.
Replying to a question, he said the effects of the US economic situation depends on how strong the economic recession is. Here, he said, "Our case is like that of the 'importance of being unimportant'."
The Finance Adviser said the country's exports, particularly the ready-made garments (RMG), still remained lower in prices. "I don't think the US economic situation will adversely affect our RMG exports."
About integration of the country's economy with the global economy, he said Bangladesh has to be cautious about the major sources of foreign exchange earnings like exports and wage earners' remittance to avert any major threat from the global economic recession.
The adviser expressed the hope that the next government would put their efforts as much as possible to widen and enhance the duty-free and quota-free market access.
"But, they (next government) will have to be more pro-active in dealing with bilateral labour issues, and try to develop skilled and semi-skilled manpower," he said, replying to a question about possible option for the upcoming government.
Finance and planning adviser Mirza Azizul Islam said Monday Islamic Development Bank (IDB) has agreed to finance modernisation of the country's aging lone oil refinery and a establishment of a 150 megawatt (MW) power plant.
The positive response came during a meeting held on September 24 between Dr Aziz and IDB president Dr. Ahmed Mohamed Ali in Jeddah.
"The IDB financial assistance for modernisation of the Eastern Refinery Ltd (ERL) in Chittagong is worth US$ 191 million and $96 for the Bhola power project," Dr Aziz told reporters on return home after performing Umrah.
Energy division secretary Mohammad Mohsin said IDB's commitment to lend $191 million for modernisation of the Eastern Refinery in Chittagong is encouraging.
The country has planned to treble the existing capacity of the Eastern Refinery to cut oil import.
"Due to oil price hike and limited capacity of the refinery the country's oil import bills surged to $3.2 billion in fiscal 2007-08 from $ 2.1 billion in the previous fiscal," he said.
The country, which imported 3.5- 3.8 million tonnes of oils to meet its annual requirement, has to bring in some 2.5 million tonnes of refined oils or 71 per cent of the total need.
The country's only refinery is capable of refining 1.0 million tonnes annually. The oil refinery in Chittagong has been in operation since 1967.
The energy division officials said the country could save significant amount of money if the capacity of the Eastern Refinery is raised as the price gap between per barrel refined and crude oil is at least $ 20 in the world market.
It will take at least three years to complete the modernisation of the refinery, they said.
Dr. Aziz said the Jeddah-based multilateral lending agency has also given assurance to finance two other projects including Teesta second barrage worth $177 million.
Besides, the finance adviser has urged the IDB to increase the amount of annual loan for the country's oil import bill and reduce its interest rate.
IBD provides $1.0 billion annually to finance oil import at 1.54 per cent interest rate.
The finance adviser said the deepening recession will have no major impact on the country's economy as local financial institutions have no direct links with the US-based financial institutions.
The US market is single largest export destination of Bangladesh's readymade garments (RMG) and frozen foods. About 30 per cent of the country's RMG export is shipped to the US market annually.
Dr Aziz, however, ruled out any adverse impact on the country's RMG export saying local RMG products are cheap and competitive, and these will remain within the buying capacity of the Americans.
The country exported goods worth $1.54 billion in July last, a new monthly record despite concern of the country's businessmen over the growth prospect due to economic meltdown in major economic powerhouses.
Dr Aziz said the caretaker government is working to leave behind sound economic conditions for the new elected government.
"We are improving the bilateral relation with other countries and trying to increase the inflow of remittance and export," he said.
UNB adds: The finance adviser said the country's economy, having no major stress at present, is unlikely to be affected largely due to the near recession in the United States and elsewhere.
"This is because we're mostly dependent on the multilateral donors, more than we're dependent on the bilateral donors," he told reporters at his planning ministry office.
Dr Aziz said the replenishment of foreign aid from the multilateral donors has not been declining, and these donors are unlikely to back out from their commitment.
He said the flow of aid from the bilateral donors would depend on how the economic recovery efforts affect their respective budgets.
Replying to a question, he said the effects of the US economic situation depends on how strong the economic recession is. Here, he said, "Our case is like that of the 'importance of being unimportant'."
The Finance Adviser said the country's exports, particularly the ready-made garments (RMG), still remained lower in prices. "I don't think the US economic situation will adversely affect our RMG exports."
About integration of the country's economy with the global economy, he said Bangladesh has to be cautious about the major sources of foreign exchange earnings like exports and wage earners' remittance to avert any major threat from the global economic recession.
The adviser expressed the hope that the next government would put their efforts as much as possible to widen and enhance the duty-free and quota-free market access.
"But, they (next government) will have to be more pro-active in dealing with bilateral labour issues, and try to develop skilled and semi-skilled manpower," he said, replying to a question about possible option for the upcoming government.