BSC to buy four mother vessels with Chinese supplier’s credit

Bangladesh Shipping Corporation (BSC) has signed an agreement with a Chinese company to build four ocean-going mother vessels under supplier's credit to expand its fleet.

The state agency inked the deal with China National Machinery Import and Export Corporation (CMC) at the BPC office in Dhaka on October 14 last.

Two crude oil mother tankers and two mother bulk carriers will be procured mainly to carry fuel oil for the Bangladesh Petroleum Corporation (BPC) and commodities of the department of food, officials said.

BSC Managing Director Commodore Ziaul Hoque told the FE on Monday that he was now planning to hold the keel laying or formally start the construction of the ships by next month (November).

The Export-Import Bank of China is providing suppliers' credit amounting to Tk 24.86 billion while the BSC will bear Tk 1.34 billion for the Tk 26.20 billion worth of project.

The lender will charge 2.2 per cent interest on the loan to be repaid in 15 years with a grace period of four years.

Economists and analysts raised questions about buying ships with suppliers' credit at the time when the country's economy is under severe stress due to shortage of foreign exchange reserves, and there is no sign of economic rebound.

They pointed out that the Chinese loans come with shorter repayment periods as compared to the other lenders that put pressure on the economy as the size of instalments are bigger.

The CMC was nominated by the Chinese authority as the contractor for building the ships at a Chinese shipyard.

In case of suppliers' credit, the lender itself selects contractors while the contract value is also fixed by the contractor in absence of a competitive bidding, analysts say.

The BSC has a fleet of eight vessels, mainly bulk oil and chemical carriers.

Stakeholders raised questions about the necessity of buying ships by spending scarce foreign exchange when the corporation fails to manage the existing vessels.

They say the BSC in 2018 procured six vessels - three chemical/oil tankers and three bulk carriers - but did not carry any products for the BPC or the food department as they are not interested in BSC's services.

The vessels were chartered out on a long-term basis and the tankers were never used for carrying petroleum for the BPC, informed sources said.

However in the project proposal, the BSC had argued that these vessels will mainly be used to carry government's imports and save foreign currency.

In the project proposal for the four new vessels, the BSC said it will carry crude oil for the BPC by using two mother tankers.

However, officials said the BSC has no agreement or contract with the BPC to carry crude oil and BPC in its purchase favours cost and freight (C&F) system which means the seller will pay the costs and freight necessary to carry goods to the delivery port.

And, it also procures marine insurance against the buyer's risk or loss to the goods during transportation of goods. Due to the preference of C&F system by the BPC, the BSC hardly gets fuel oil to carry by its ships.

The stakeholders say that like the previous vessels the BSC will also have to charter out the newly acquired vessels thus will hardly bring any benefit to the country.

Talking to the FE recently, the BSC managing director said the new mother tankers will be used to carry crude oil for the BPC. "We're buying these vessels mainly to carry crude oil up to single point mooring from the suppliers' point."

syful-islam@outlook.com