The government has declined to provide Tk 2.0 billion sought by the Trading Corporation of Bangladesh (TCB) as the state-run entity is now enjoying different facilities for its operation, officials said.
"The TCB in a letter sent to the Ministry of Commerce (MoC) in June last year sought interest-free seed money of Tk 2.0 billion with a view to keeping the prices of essential commodities stable," said a high official of TCB.
"We sent an official letter to the MoC, seeking fund as seed money," he mentioned.
The state-owned agency is currently getting various facilities including Loan against Trust Receipt (LTR) and subsidies for trade gap from the government. It is not reasonable to provide different types of facilities simultaneously, said a senior official of the finance ministry, seeking anonymity.
Besides, there are a good number of loss-making state-run entities. The government has to consider its financial capacity first. For this, the finance ministry has not agreed to provide any fund to the TCB, he added.
The government provided the state-run entity with about Tk 3.76 billion as subsidies including interest between the fiscal years (FYs) 2010-11 and 2015-16, according to the TCB.
TCB has long been facing capital shortage and borrowing from banks to procure essential items for the purpose of market intervention, officials said.
As a result, they said, the procurement of essential items becomes difficult for them and costs get higher due to accrued interest on the loans.
A senior MoC official said the TCB has to pay interest at a rate between 10 per cent and 12 per cent in the case of taking Loan against Trust Receipt (LTR) from the banks. "Interest expense pushes up import costs."
As a result, the prices of the products go up and the corporation has to take subsidy from the government, he added.
But the trading agency could not make any visible impact with regard to keeping the prices of essentials stable and at a tolerable level for the common consumers even after getting a large amount of financing every year, the official said.
He added: "Cost will become much lower and consumers will be able to buy goods at reasonable prices if commodities are imported through cash payments."
It is one of the TCB's responsibilities to intervene in the market when the prices of essentials go up in the open market, he said.
Overall operational activities carried out by the TCB could have been smooth and capital shortage could have been removed if the government provided the fund, he mentioned. As the TCB sells commodities at subsidised rates, it incurs huge financial losses every year, he observed.
Despite repeated efforts made by the TCB, no impact was witnessed in respect of market intervention due to procedural delays, manpower shortage and lack of necessary warehouses of the agency, sources concerned said.
"We will seek seed fund. In this regard, we will apply again to the MoC," TCB chairman Abu Saleh Md Golam Ambia told the FE.
There are a total of 2,816 dealers listed with the TCB across the country to date, according to the corporation.
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