(Financial Express, Aug 2, 2006) The government has sought $225 million credit from the Hong Kong Shanghai Banking Corporation (HSBC) for future payment of oil bills.

The government is likely to face payment problem for fuel import bills after November if alternative financial arrangements are not finalised soon, said sources.

"We have already sought $ 225 million from the HSBC. But we have not yet received any confirmation from the HSBC," said one Bangladesh Petroleum Corporation (BPC) official.

"Under the prevailing financial arrangements with the banks and lending agencies, we have time to pay import bills of petroleum products until November next," a senior official of the Energy and Mineral Resources Division (EMRD) told the FE Tuesday.
But to pay for import of petroleum products in the overheated international oil market after November, the EMRD must have to fix alternative arrangements, the official said.

Currently, the state-owned Bangladesh Petroleum Corporation (BPC) has financial arrangements with the Islamic Development Bank (IDB) and the Standard Chartered Bank to pay for gasoline imports.

In April last, the EMRD could arrange US$ 500 million from the Islamic Development Bank (IDB) and the Standard Chartered through negotiation for financing of fuel imports until November next.

Under the arrangement, the IDB and the Standard Chartered will lend $250 million each.

The EMRD is again approaching the IDB and the Standard Chartered Bank to extend their lending facilities to the BPC.
The government is continuing its drive to ensure import of fuel from Kuwait Petroleum Corporation (KPC) on deferred payment, the official said
The EMRD adviser Mahmudur Rahman is likely to visit Kuwait soon to resolve the issue of deferred payment.

In discussions with the EMRD in May this year, the KPC had agreed on deferred payment for 50 per cent of the total amount for a period of six months against the import of petroleum products from the corporation.

Under the preliminary negotiation, the BPC will have to pay $50 million towards the current dues and $50 million as part of deferred payment to the KPC against one month's petroleum imports, the EMRD sources said.

But the deferred payment system has now become uncertain due to the recent refusal by the National Bank of Kuwait (NBK) to take risk from such deal against fuel import for Bangladesh without having guarantee from foreign banks.

Considering the prevailing fund crisis of the BPC, the foreign banks are not showing interest in opening LCs for fuel import, said sources.

In March this year, the BPC plunged into a financial trouble for missing two deadlines on repayment of the IDB loans because of the Sonali Bank's refusal to extend credit and open letters of credit (LCs) against fuel import.

The IDB also fined the BPC around $30,000 for defaulting on the payment of around $10 million by March 16, 2006 deadline.

The BPC sources said the country currently imports 3.80 million tonnes of oil every year from the KPC and the Indian Oil Corporation (IOC).

Of the imported fuel oil, 2.3 million tonnes are diesel, 0.55 million tonnes are kerosene, 0.31 million tonnes are furnace oil, 0.27 million tonnes are jet fuel and 0.15 million tonnes are octane.
Over 80 per cent of the total imported petroleum products are imported from the KPC.
Source:Financial Express
tag:China energy oil