Govt to borrow $75m from IDB for fuel import

January 31, 2009

Asif Showkat
The finance ministry has given its consent to seek $75 million loan for fuel import from the Jeddah–based Islamic Development Bank with a six per cent mark-up rate, officials said on Thursday.
The ministry has also suggested more negotiations with the IDB for reduction of the mark-up rate.
The government will seek the loan from the Islamic Trade Finance Corporation, a newly established window of the IDB to deal with trade finance, at an interest rate 5.0 per cent more than London inter-bank offer.
‘The BPC will get $75 million loan from the IDB. The IDB plans to increase the mark-up rate as the Energy Division has secured consent of the finance ministry,’ Bangladesh Petroleum Corporation chairman Anwarul Karim told New Age on Friday.
He also said that they badly needed $200 million for immediate import of fuel.
Although, the ministry did not approve an Energy Division proposal for providing a $200 million, or Tk 1,400 crore, fund for immediate use.
The division has also sought last week Tk 1,400 crore for import of fuel from the international market, as the BPC is facing an acute liquidity crisis.
The IDB has set the condition of a mark-up rate considering the fallen fuel prices on the international market, and as a result the reduced LIBOR rate, finance ministry sources said.
‘We have tried hard to get loan for import of fuel from the international financial institution but failed for their rigid conditions,’ said a senior official of the Energy Division on Thursday.
‘Their rigid conditions do not conform to the country’s rules and regulations,’ the official added.
Earlier, the Energy and Mineral Division had failed to get $500 million from the France-based bank BNP Paribas for various reasons.
Another official of the Energy Division said the BPC had not made any loss by importing fuel in the last several months as the global fuel price remained very low.
At present, the price of crude oil is $41.80 per barrel, which peaked to $147 per barrel in last July.
According to the official, the BPC has to pay unpaid loans amounting to Tk 15,500 crore, accumulated over several years due to fuel price hike on the international markets. The bulk of the loans the corporation owes to the state-owned banks (Tk 7,000 crore), Tk 4,000 crore to the IDB and the rest to the National Board of Revenue.


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