Procurement News Notice |
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| PNN | 3015 |
| Work Detail | Bangladesh Petroleum Corporation (BPC) borrowing from the Islamic Development Bank (IDB) for oil import has been on a headlong fall for a slip in international oil prices over the years, officials said Friday. As such, the state-owned petroleum-marketing agency goes on making substantial profits even after some price cuts in recent times. Energy Division officials said loan from the Islamic Trade Finance Corporation (ITFC) under the IDB plunged 70 per cent to only about US$800 million this year from a peak of $2.60 billion in 2012. "Since the crude and refined oil prices in the global market have fallen remarkably, resulting in lower import payments, we have been borrowing lesser credits from the costly ITFC over the years,'" said a BPC official. Besides, he added, the BPC now makes profit selling oil to domestic consumers that also prompted it to cut the external borrowings. The corporation every year borrows from the IDB's trade-financing wing, ITFC, to procure crude and refined oils from world's major oil suppliers like Kuwait, Saudi Arabia and the UAE. According to the BPC, its borrowing peaked in 2012 as it took the highest $2.60 billion worth of credits from the ITFC due to higher oil-import bills that time. In 2012, the oil price jumped to US$128 per barrel. Currently, an international oil slump pegged the price down to $48.95 per barrel, as on August 25. After a record-high borrowing in 2012, the oil loan went on a downturn: $2.0 billion the following year, $1.20 billion in 2014, and $1.0 billion from 2015. Currently, the government has to repay IDB's short-term loan (6-month period) at 4.2 per cent interest. The country's oil-importing agency, BPC, had been in the red since 1999 but made a turnaround since September-October 2014 by counting profits. Lower oil-price trends have already saved the government from the burden of heavy subsidy to the power sector that consumes costly fuel oil alongside subsidy cuts on other petroleum products like diesel, octane, petrol and kerosene for the domestic market. The public utility agency bagged nearly Tk 70.50 billion in profit in the last financial year (FY), 2015-16, in spite of the recent price cuts on the local market, official data showed. On the back of sliding global oil prices, this is a record profit that the state-owned corporation has logged since it was founded 40 years ago. The BPC also deposited Tk 17.58 billion with the national exchequer in FY2016. After five consecutive years of losses, the petroleum corporation in the previous FY 2015 made a profit of Tk 41.26 billion. Before that, it last logged profits of Tk 3.23 billion back in FY2009. Though the government made little price adjustments recently following demands by economists and businesses, there is still a big difference between international and local prices. On March 31, the government cut the price of furnace oil, mostly used by industries and power plants, by more than 30 per cent to Tk 42 a litre. Then, on April 24, the government brought down the tariffs of octane and petrol by Tk 10 a litre and diesel and kerosene by Tk 3.0 per litre. Despite the cuts, the BPC is still making a profit of Tk 23 to Tk 28 per litre of petrol and octane and about Tk 16 in the cases of diesel and kerosene, sources said. According to the BPC, the oil import in the last FY2016 also decreased as the state-owned corporation imported a total 4.76 million tonnes of crude, refined and lube base oils costing Tk 149.56 billion. In the previous two consecutive years (FY2015 &FY2014), had it imported 5.39 million tonnes of oil at a total cost of Tk 270.23 billion and 5.35 million tonnes of oil at Tk 365.87 billion respectively. The BPC had been in the red zone over the years between FY2010 and FY2014 as oil prices were high on the international market. At the time, oil prices were not adjusted locally in accordance with global prices. The losses had forced the government to set aside a huge amount of taxpayers' money as subsidies in its budget in those five years. The amount of money that the government set aside from its exchequer was nearly Tk 570 billion, of which the government provided Tk 263.50 billion as loan. |
| Country | Bangladesh , Southern Asia |
| Industry | Financial Services |
| Entry Date | 03 Sep 2016 |
| Source | http://www.thefinancialexpress-bd.com/2016/08/26/43526/External-borrowing-for-oil-import-falls-headlong |
