Bangladesh Petroleum Corporation, the country’s lone fuel oil importer, would go for a syndicated loan of around US$400m from three multinational banks under the supervision of International Monetary Fund (IMF).
The banks are Standard Chartered Bank (SCB), Hong Kong and Shanghai Banking Corporation (HSBC) and Citibank NA.
Finance division has asked the cash–strapped state agency to make sure that the foreign credit is not crossing the credit limit that ranged between $350m and $400m in accordance with an IMF condition under its extended credit facility, said a senior official of the finance division.
He said the loan is now at the final stage before signing an agreement within a month. Energy division finalised the deal last week.
According to the IMF credit limit, Bangladesh should not go beyond $1.5bn a year, sources in the finance division say.
The government came under pressure from the global lending agencies such as the IMF last month to increase the prices of fuel oil again to cut the subsidy burden.
As per the energy division proposal, the lenders sought immediate guarantee of Bangladesh Bank and counter-guarantee from the finance division as BPC will have to repay a huge amount of fund by June 2013.
Authorities concerned would seek recommendations from legal adviser for the external credit before Bangladesh High Commission in the UK taking necessary measures and BPC signing the contracts to get the loan, says the proposal to the finance division. BPC chairman Eunusur Rahman told the Dhaka Tribune that the interest of the credit this time will be lower than the previous loans taken from foreign banks. BPC has a capacity to repay the loan despite cash crisis at present, he added.
The government would require $3.5bn to import around seven million tonnes of petroleum oil annually to meet the domestic demand.
The Islamic Trade and Finance Corporation (ITFC), a subsidiary agency of Islamic Development Bank (IDB), approved $2bn hard-term loan to BPC while the government would mobilise rest of the amount from the syndicated loan and own resources.
BPC would require Tk115bn against subsidy this fiscal if it imports petroleum products at present rates from the international market.