The Energy and Mineral Resources Division (EMRD) in an unprecedented move will hold two separate road shows in Bahrain and Dubai to convince international lenders to extend credit for fuel imports.
"The road shows will be held today (Monday) and tomorrow at two separate venues in the two countries in the middle east - Bahrain and Dubai - respectively focussing on the mode of repayment," a top official of the EMRD told the FE Sunday.
A high-powered team headed by EMRD Secretary AMM Nasiruddin and Bangladesh Petroleum Corporation (BPC) Chairman Sheik Khurshid Alam left Dhaka Sunday to deliver presentations on the road shows.
Through these first-ever road shows abroad the team will try to entice the international lenders to provide syndicated loans to the BPC to import fuels on credit against the background of the overheated international oil market.
EMRD sources said the looming uncertainty over the deferred payment arrangement with Kuwait for importing gasoline products has pushed the government towards looking for alternative financial arrangements desperately to meet payments against fuel imports.
They feared, the government would face a problem in footing the fuel import bills after November this year if alternative financial arrangements are not made soon.
The EMRD already sought $250 million in credit from the Hong Kong and Shanghai Banking Corporation (HSBC) for payment of oil bills in future.
"Under the prevailing financial arrangements with the banks and lending agencies, we will be able to pay import bills of petroleum products until November next," the EMRD official said.
Currently, the state-owned Bangladesh Petroleum Corporation (BPC) has financial arrangements with the Islamic Development Bank (IDB) and the Standard Chartered Bank to pay for gasoline imports.
In April last, the EMRD could arrange $ 500 million from the Islamic Development Bank (IDB) and the Standard Chartered Bank through negotiation for financing fuel imports until November next. Under the arrangement, the IDB and the Standard Chartered will lend $250 million each.
The EMRD is again approaching the IDB and the Standard Chartered Bank to extend their lending facilities to the BPC.
Sources said the government is still continuing its drive to ensure import of fuel from Kuwait Petroleum Corporation (KPC) on deferred payment, the official said.
In discussion with the EMRD in May this year, the KPC had agreed on deferred payment for 50 per cent of the total amount for a period of six months against the import of petroleum products from the corporation.
Under the preliminary negotiation, the BPC would have to pay $50 million as the current dues and $50 million as part of the deferred payment to the KPC against one month's petroleum imports, the EMRD sources said.
But the deferred payment arrangement has now become uncertain due to the recent refusal by the National Bank of Kuwait (NBK) to take risk of such a deal against fuel import for Bangladesh without any guarantee from foreign banks.
Considering the prevailing fund crisis of the BPC, the nationalised commercial banks (NCBs) and the foreign banks as well are not showing interest in opening letters of credit (LCs) for fuel import, said sources.
The state-owned BPC suffered Tk 27 billion (2700 crore) losses last year due to sale of petroleum products at subsidised rates, a senior BPC official said.
He also said the BPC owes around Tk 500 billion to different nationalised commercial banks (NCBs) with the biggest chunk to Sonali Bank as the corporation has failed to repay its loan year after year.
The BPC, a subsidiary of Petrobangla, is now facing a dire liquidity crisis owing to non-payment of arrears amounting to Tk 9.0 billion by large public sector corporations like Bangladesh Power Development Board (PDB), Biman Bangladesh Airlines, Bangladesh Chemical Industries Corporation (BCIC), Bangladesh Railways (BR) and defence services organisations, he added.
Sources said the PDB, Biman, BR, the defence services and BCIC regularly procure their diesel, jet fuel and petrol from the BPC without clearing dues.
The dues of PDB, Biman, BR, defence services and BCIC stand at Tk 1.55 billion, Tk 4.65 billion, Tk 68.5 million, Tk 516.4 million and Tk 203.4 million respectively, BPC sources said.
The country currently imports 3.80 million tonnes of oil every year from the Kuwait Petroleum Corporation (KPC) and the Indian Oil Corporation (IOC).
Of the imported fuel oil, 2.3 million tonnes are diesel, 550 thousand tonnes are kerosene, 310 thousand tonnes are furnace oil, 270 thousand tonnes are jet fuel and 150 thousand tonnes are octane.
Over 80 per cent of the total petroleum products are imported from the KPC.