The Financial Express

Desperate Biman again seeks fiscal concessions

Wants conversion of debt to government into equity, waiver of dues to Padma Oil, CAAB

| Updated: January 15, 2020 13:39:54

Evaly and Fianancial Express Evaly and Fianancial Express
— File photo — File photo

Biman Bangladesh Airlines, the national flag carrier, has pleaded for converting its Tk 25 billion debt to the government into equity and waiving another Tk 27 billion it owes to two state entities, officials have said.

Biman made the appeal in a letter sent to the civil aviation ministry last month. The ministry has recently forwarded the same to the finance ministry for taking necessary steps.

According to officials, Biman owes Tk 14.49 billion to Padma Oil Company Ltd in arrear fuel oil bills and Tk 10.47 billion to Civil Aviation Authority of Bangladesh (CAAB).

Also Biman owes Tk 6.58 billion to Padma Oil Company Ltd as interest on unpaid bills and Tk 19.93 billion to CAAB as surcharge.

According to the letter written by Biman chief executive officer (CEO) Mokabbir Hossain, a committee of Bangladesh Petroleum Corporation (BPC) has recommended that Biman's dues to Padma Oil could be paid by the finance ministry through book adjustment.

He also wrote that Biman has reservations about CAAB's imposition of surcharge on the national flag carrier's unpaid bills.

Because in some cases, he said, surcharge was imposed on monthly basis at the rate of 6.0 per cent and annually at72 per cent and in the case of unpaid bills of 2007, the surcharge rose to 700 per cent.

Mr Hossain also wrote that Biman now pays around Tk 1.0 billion in monthly installment of loans taken to buy several aircraft. Besides, it pays Tk 550 million to Padma Oil as monthly fuel oil bill and Tk 200 million to CAAB as regular bill.

So, Biman is unable to repay the arrear bills to Padma Oil Company and CAAB, he said in the letter.

According to the letter, Biman made profits in first two years after it was converted into a public limited company.

The company incurred a loss of Tk 14.35 billion between the fiscal year 2009-10 and FY 2013-14 due to price hike of fuel oil, uneven competition, lack of required aircraft and carrying out operations by aircraft taken on lease, the CEO said.

Biman started making profits again in FY 2014-15 and this trend continued for next three years. In FY 2017-18, it suffered loss again but profits rebounded in FY 2018-19.

According to officials, while converting Biman into a limited company in 2007, its dues worth Tk 11.94 billion to BPC and Tk 5.73 billion to CAAB were converted into government's equity through an order issued by the finance ministry.

At the same time, Biman's dues to CAAB worth Tk 12.16 billion as surcharge were waived.

A senior finance ministry official told the FE that Biman was transformed into a limited company with the objective of helping it come out of the losing phase..

But the goal has not been achieved. Rather its dependence on the government has increased further, he said.

Aviation expert Kazi Wahidul Alam earlier told the FE that Biman's debt to BPC and CAAB was once written off back in 2007 when it was converted into a company.

He said the government repeatedly injected cash and provided Biman with various facilities but it has failed to perform well.

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