Govt mulls over issuing 'Sukuk' bond in favour of BSL

The government is considering issuing Shariah-based Sukuk bond in favour of the state-owned Bangladesh Services Limited (BSL) for helping settle its existing debt liability.

The BSL, which is a public limited company and engaged in hospitality business, is liable to pay a huge amount of debts, according to officials.

To this effect, the Finance Division is set to send a proposal to the central bank for conducting a feasibility study on issuance of such bond.

The decision was taken at a meeting of the Ministry of Finance last month (May), according to the official sources.

The meeting observed that the BSL is now on the verge of bankruptcy as commercial activities have been hampered severely for want of funds.

Besides, the company finds itself in a difficult situation to service its existing debts, the meeting was informed.

Keeping this in view, the BST sought Tk9.0 billion worth of financial assistant from the government for repayment of its bank loans.

According to BSL, if such financial support is available from the government, it would be able to settle its outstanding dues and make it operationally sound and financially viable by the year 2030.

As of March 2025, the volume of BSL's outstanding loan reached Tk8.97 billion, it was learnt.

Of the total, a sum of Tk 5.03 billion is principal amount while the amount of accumulated interest stood at Tk 3.94 billion.

The company needs to pay around Tk800 million annually for servicing its debts.

The state-run BSL earned Tk1.93 billion as gross revenue in the fiscal year 2023-24, reflecting a 14 per cent rise over the previous year.

Despite having its higher revenue income, the company incurred a net loss of Tk780 million after deducting administrative and other expenditures.

In the first six months of the fiscal 2024-25, the BSL's loss totaled at Tk 508 million.

The BSL has been engaged in the hospitality business since its inception and has pioneered international standard five-star hotel business in Bangladesh more than 40 years back, it was learnt.

The company operated hotel business in the name of Hotel Inter-continental Dhaka from 1973 to 1983 under an agreement with the-then Inter-continental Hotels Corporation, USA, Dhaka Sheraton Hotel from 1984 to April, 2011 under an agreement with Starwood Asia Pacific Hotels and Resorts Pvt. Ltd., USA and Ruposhi Bangla Hotel since May 2011 until it was closed for renovation in September 2014.

On 19th February 2012, the BSL signed a Management Agreement with InterContinental Hotels Group (Asia pacific) Pte Ltd. (IHG) for a 30-year term for the management of its hotel with the option to renew the agreement for 2 terms of 5 years each.

As per the agreement, after the completion of its renovation, the hotel had been rebranded as InterContinental Dhaka.

The total cost of the renovation was Tk7.28 billion, funded through Tk5.74 billion in loans from Agrani Bank and Tk1.54 billion from the company's own funds.

The BSL is listed with the country's stock market and paid a 15 per cent stock dividend in 2014 while it has not been able to declare any dividend for the stockholders for the last 12 years.

According to Dhaka stock exchange, The BSL, the owner of InterContinental Dhaka hotel, has suffered a loss of Tk 746 million in the nine months through March this year.

In the FY24, the company reported a loss of Tk 785 million, while its accumulated losses surged to around Tk 7.0 billion in the past nine consecutive financial years.

Between the 1996 and 2014, the company paid Tk1.01 billion as dividends to the government and deposited Tk8.40 billion in VAT, taxes, and import duties from 1998 to 2024.

However, the company also earned about Tk2.5 billion as foreign currency since 2019.

At present, the BSL's paid-up capital is about Tk 977.8 million, with the government holding 99.67 per cent of its shares.

The remaining shares are owned by general investors, Bangladesh Parjatan Corporation, and Swiss citizen Prince Sadruddin Aga Khan.

rezamumu@gmail.com