BPC to borrow $1.0b from ITFC to import petroleum products

FE Team | Published: August 04, 2018 21:43:42

Rezaul Karim
State-run Bangladesh Petroleum Corporation (BPC) is set to take out 'costlier' loan of US$ 1.0 billion from ITFC to import petroleum products from the international market in the calendar year 2019, officials said.
BPC has negotiated the loan at 4.50 per cent interest rate (ITFC calls it 'mark-up rate'), higher by 0.70 per cent from the previous year's mark-up rate of 3.80 per cent, they added.
The new mark-up rate will take effect from next year, according to a BPC document.
When contacted, General Manager (Finance) of BPC Moni Lal Das said, "The mark-up rate of the ITFC loan has been increased due to a surge in the London Interbank Offered Rate (LIBOR)."
The LIBOR rates were lower last year. For this, the mark-up rate was lesser of International Islamic Trade Finance Corporation (ITFC) that received by BPC, he added.
BPC have to pay more costs as interest payment against external loan when it will receive the loan, a source concerned said.
The state-run agency has started incurring loss again in oil trading since November last after making substantial profits for last three consecutive years since late 2014, he added.
The government will have to count a large amount of subsidy for meeting the deficit of BPC. Earlier, it had long been paying a large subsidy every year because of the mismatch between procurement and domestic marketing of fuel oils, he also said.
The soaring prices of petroleum products in the international market over the past several months have pushed the BPC back into the red zone.
The loss stands at Tk 9.46 per litre against trading of diesel and Tk 16.88 per litre for furnace oil, considering July 02, 2018 oil price in the international market.
Recently, a high-powered delegation of the state-run agency signed a US$ 1.0 billion (1000 million) loan deal with ITFC at a meeting held on July 10-12 last at Jeddah in Kingdom of Saudi Arabia (KSA).
BPC will prefer to borrow US$ 800 million initially for 2019, said officials, adding that the remaining US$ 200 million would be borrowed from ITFC to meet contingency requirements, if any.
The amount of loan and the rate of interest were fixed at the meeting in KSA. The tenure of the loan is six months from the date of corresponding disbursement and the rate of interest is 4.50 per cent including administrative fee annually. Letter of Credit (LC) issuance fee was set at 0.20 per cent.
The state-run entity has requested Energy and Mineral Resources Division (EMRD) to take necessary steps in this regard.
The division has sought opinion from the finance ministry to take required action about ITFC loan, a high official of EMRD said.
BPC imported 6.7 million tonnes of petroleum products including diesel, jet fuel, furnace oil and octane for the fiscal year 2017-18, the general manager said, adding that the country requires more or less 7.2 million tonnes of different petroleum products this calendar year.
BPC incurred losses every year from FY 2001-02 to FY 2013-14.
rezamumu@gmail.com