Bangladesh Petroleum Corporation (BPC) told Finance Division that the international firms would not be interested in maintaining business relation with the corporation because of huge government loans which were shown in its balance sheet.
BPC Chairman AM Badrudduja sent a letter with the note to the Finance Division and sought permission to turn state loans of Tk43,577.93 crore to equity of the corporation.
The letter has been sent after Finance Minister AMA Muhith asked the Energy Division to reduce prices of fuel oil as in the international market, the price fell to below $28 a barrel.
The letter also included the issue of waiving of the government loans taken between fiscal years 2005-06 and 2014-15.
According to the letter, the Finance Division provided loan of Tk26,349.81 crore to BPC with an interest of 3%-5% between FY2007-2008 and FY2014-15, while the division turned BPC loan of Tk17,228.12 crore to bonds between FY2005-06 and FY2012-13.
Finance Division officials said the division was yet to waive any of the government loans given to the state-run agencies but paid up capital of the state-run commercial banks increased due to absorbing of bad debt and unrecoverable loans.
AB Mirza Azizul Islam, a former finance adviser to caretaker government, criticised the idea of using the borrowed money in implementing BPC’s development projects like construction of new refinery.
“It’s not a good thinking to use government loan in development projects, rather the loans should be repaid to the government. The repayment will increase solvency of the government,” he said.
He also said the government will more financially solvent if the petroleum corporation repay the government loan.
As BPC is the lone state-run fuel oil importing agency, profit will be used in the development work like building new oil refinery or extension, officials said.
Finance Division sources said additional profit would be deposited to the government exchequer.
BPC is making a whopping profit of Tk25-45 per litre on petroleum products on the back of the sliding global oil prices since June 2014.
The production cost of octane is Tk56.85 per litre but the customers are buying it for Tk99, giving the state-run corporation a profit of Tk35.49 per litre.
In other words, the state-run company is set to make more than Tk5,000 crore in profits last fiscal year, said an official of the company.
