Pabna Sugar Mill Loan Dispute: Pakistan proposes joint working team

The interim government is moving with urgency to resolve the long-standing issue of the repayment of Pabna Sugar Mill loans received under Pakistan Supplier Credit, sources say.

In this regard, a high-profile inter-ministerial meeting was held between representatives from Bangladesh and Pakistan on September 1 this year.

The Pakistan side proposed forming a joint working team (JWT) comprising representatives from the Bangladesh Sugar and Food Industries Corporation (BSFIC), the Pakistan High Commission in Dhaka, and the bank concerned to resolve the disagreement on repayment figures.

Bangladesh claims the outstanding amount is more than $12.60 million, including principal, interest, and penalty interest, till January 2023.

But Pakistan claims the figure is over $19.32 million, including principal, interest, and penalty interest.

The September 1 meeting was convened by the joint secretary (BSFIC) of the industries ministry over this variance.

A joint secretary says several meetings have so far been held to settle the issue.

In 2018, Bangladesh proposed repayment with a waiver of penal interest.

However, no conclusive response was received from Pakistan, leaving the issue unresolved.

The mill's construction started on December 26 in 1992 with loans received under Pakistan Supplier Credit (government to government).

The Bangladesh government signed a $12.0 million loan deal on March 14 in 1992 with a 2.0 per cent annual interest rate, including a 1.0 per cent (above the six-month London Interbank Offered Rate) penalty interest rate.

The grace period was set at four years, including 22 instalments.

Of the instalments, 15 have already been paid.

Bangladesh has so far repaid $7,733,087.24 in principal and $1,660,386.84 in interest through Bangladesh Development Bank.

The total repayment stands at $9.39 million.

The last instalment was paid on August 12 in 2013.

A senior industries ministry official says, "We expect that another meeting will be held to resolve the dispute."

He says the continuous losses faced by the mill and the BSFIC financial crisis led to non-repayment of instalments.

At the recent meeting, officials from Pakistan's Economic Affairs Division and the Pakistan High Commission in Dhaka were present physically and virtually, he adds.

Test production at the mill began in 1996. The government closed it in 2020.

Sources say the mill currently has debts of about Tk 7 billion. The number of permanent, temporary, and seasonal employees at the mill was about 1,200.

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