Bangladesh Petroleum Corporation (BPC) is set to seek a credit worth US$300m from Islamic Trade Finance Corporation (ITFC) for importing fuel oil to meet increased demands in the country.
The lone state-run oil trading company sought permission as well as legal opinions of the finance ministry to sign an agreement with the international financial institution, an autonomous entity of the Islamic Development Bank (IDB).
In a letter wrote last week, BPC requested the ministry to provide a state guarantee along with Currency Repatriation Undertaking (CRU) for getting the loan.
“This credit will be a part of a syndicated murabaha operation loans worth $2,200m loan of ITFC for the year 2013,” a senior finance division official told the Dhaka Tribune yesterday
The BPC has sent the letter to the debt and credit management wing under the finance division through its supervising ministry, which is the Ministry of Power and Mineral Resources.
Till now, BPC already received $50m loan from ITFC with an interest of 4.45% for nine months. The IDB has reduced the mark-up rate from 5% last year.
The corporation had imported over 7 million tonnes of fuel oil in the last year to run 49 mostly fuel-run power plants to generate an additional 5,319 megawatt of electricity by the end of 2013.
The BPC buys petroleum oil at higher prices from the international market than the sales price at domestic market.
As a result, the state-run company has to incur huge amount of financial losses every year.
BPC had earlier signed a credit deal worth $855m with ITFC in April 2012 for importing the fuel oil to meet the local demands.
The BPC had received $1.48bn loans from the ITFC in 2011 and the lender had also increased the loan amount by $0.52bn this year.
In December 2011, the ITFC assured Bangladesh of providing $2bn credit with 5% interest rate this year, which was 0.30% lower than that of the last calendar year.
