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Bangladesh Petroleum Corporation (BPC) would soon get released a loan of US$ 125 million from the International Islamic Trade Finance Corporation (ITFC) under an annual lending programme to facilitate importing petroleum products.
The state-run entity has recently requested the Energy and Mineral Resources Division (EMRD) to complete necessary formalities in this regard, officials said.
They said the fund is expected to help mitigate the payment burden of outstanding bills against imports of fuel oils from the suppliers and facilitate ensuring the smooth supply of the petroleum products in the country.
The BPC owes around $ 246 million to different suppliers of refined fuel oils as of December 28 last, said an official.
The BPC is supposed to borrow $1.4 billion from the ITFC - a member of the Islamic Development Bank (IsDB) Group - during the current fiscal year (FY 2023-24) under the annual loan arrangement, according to a senior BPC official.
The standing committee on non-concessional loans has already approved the loan proposal while the BPC has so far received $750 million up to fifth operation of the loan programme, and used around $620 million.
The interest rate of the ITFC loan would be the secured overnight financing rate (SOFR) plus 2.0 per cent. From July 01 last year, the SOFR has replaced the London Interbank Offered Rate (LIBOR) as the new benchmark interest rate for international lending.
A high official said the BPC earlier signed a loan agreement with the ITFC to ensure smooth access to loans. With the newly signed ITFC loan, the BPC is optimistic about making regular payments to the oil suppliers.
For the calendar year 2023, the BPC estimated importing around 7.69 million tonnes of refined petroleum products that is 18.3 per cent higher than 6.5 million tonnes in 2022.
These fuel imports include around 5.31 million tonnes of 0.005-per cent sulphur gasoil (diesel), 700,000 tonnes of Jet A-1 fuel, 600,800 tonnes of 95 RON gasoline (octane), 900,000 tonnes of high-sulphur fuel oil with 3.5-per cent sulphur and 180,000 tonnes of 0.50-per cent sulphur marine fuel.
Besides, the country's private sector is expected to import around 3.50 million tonnes of furnace oil, according to sources.
The BPC maintains government-to-government arrangements with nine listed suppliers of refined oil products, including Kuwait Petroleum Corp, Malaysia's Petco Trading Labuan Company, Dubai's Emirates National Oil Company, China's PetroChina, Indonesia's PT Bumi Siak Pusako, China's Unipec, Thailand's PTT International Trading and India's Numaligarh Refinery Ltd (NRL) and Indian Oil Corporation.
Around half of the BPC's total refined oil is sourced through an international tendering system, while the remaining half is acquired through government-to-government negotiations with state-run oil suppliers worldwide.
Bangladesh has been facing an acute dollar crisis since the commencement of the Russia-Ukraine war in February 2022.