Six foreign cos won’t give oil to Bangladesh

$30 m in arrears

Special Correspondent: The government of Bangladesh is struggling to pay the arrears of imported fuel due to the dollar crisis. In addition, the British news agency Reuters said that fuel reserves are dangerously decreasing in Bangladesh.
Reuters has given this news based on one of the two letters sent by Bangladesh Petroleum Corporation (BPC). Six international companies will get $300 million for fuel oil from Bangladesh. According to the source of the letter, some of them have threatened not to send the oil cargo to Bangladesh in addition to reducing the oil shipment due to non-payment.
Last year in the summer, the power crisis became extreme in Bangladesh due to lack of fuel. It affected various industries including export-oriented garments. The letter, obtained by Reuters, said BPC was delaying payment of fuel due to foreign exchange crisis.
According to the news of Reuters, in this situation, BPC has requested the government to allow the commercial banks of the country to pay India’s debt in rupees.
When asked about this letter from BPC Bangladesh Bank, they said, in the context of the global economy, priority has been set in the case of discounting the dollar.
In a letter sent to the Ministry of Energy on May 9, BPC said, “Due to the shortage of foreign currency in the country’s market and the inability of the central bank to meet the demand for dollars, the commercial banks are not able to pay the import costs on time.”
Earlier, in another letter sent last April, BPC said, “If fuel is not imported as per the schedule for May, there may be a disruption in the supply across the country, as well as a dangerous reduction in fuel reserves.”
Reuters tried to speak to the BPC and the ministry, but none of them responded to phone calls.
When the Russia-Ukraine war broke out in February 2022, oil prices exceeded $100 per barrel; As the price of other goods increases, the exchange rate of the US dollar increases. Bangladesh Bank releases dollars from reserves into the market to intervene in the market. Due to these reasons, the foreign currency reserves of Bangladesh decrease. It is decreasing every month.
In this situation, Bangladesh applied for a loan from the International Monetary Fund (IMF) last year. Bangladesh has already received the first tranche of the loan, with the IMF approving a $4.7 billion loan.
According to the news of Reuters, Bangladesh Bank has allocated $5 billion to BPC and $200 billion to Petrobangla for LNG import in the current financial year to meet import expenses. Besides, commercial banks have also been given $3 billion to open loans.
Bangladesh Bank spokesperson Majbaul Haque told, “We are managing everything logically. We need to get our priorities right in the context of the global economy. Despite various ups and downs, we are maintaining reserves of more than $30 billion.
BPC imports five lakh tonnes of refined oil and one lakh tonnes of crude oil every month. The six companies they are buying oil from are Unipec, a commercial partner of China’s state-owned company Sinopec, Vitol, Enoc, Indian Oil Corporation (IOC), PetroChina and Indonesia’s BSP.
According to BPC’s May 9 letter, this year India’s Numaligarh Refinery will have to pay $4.11 million to BPC; IOC will have to pay $147.2 million for diesel and jet fuel.
In this situation, BPC has requested the government to allow state-owned commercial banks to pay Indian companies in rupees.
Meanwhile, the state-owned Bangladesh Power Development Board (BPDB) has not been paying bills worth $1.5 billion to private power generation companies for several months citing shortage of dollars.
Faisal Khan, president of Bangladesh Independent Power Producers Association, an organization of power producers, told Reuters, “Many local power producers are going bankrupt because of this delay; If this is not remedied, the power supply may be disrupted.
In this regard, BPDB spokesperson Shamim Hasan said, ‘It is an ongoing process. We are trying to pay the bills as fast as possible, but like everyone else we are in a dollar-crunch.’