Bangladesh Petroleum Corporation (BPC) is concerned that international oil suppliers will cancel diesel shipments because of the delay in payments and outstanding bills.
The suppliers have already threatened to cancel the shipments due to these reasons, BPC officials said. Currently, the country has a diesel reserve of 30 days and that is normal for the time being.
However, resolving the payment-related complications and quick settlement of arrears will prevent suppliers from holding back future diesel shipments, they said.
BPC officials also said that the US dollar shortage in fuel oil imports has reached its peak since March. BPC already owes more than $350 million to oil suppliers, which is why most of the companies are refraining from releasing oil even after the shipments reached Chattogram Port.
On top of that, BPC pays $32,000 daily as financial punishment due to the delay in oil redemption, leaving the corporation in double jeopardy.
The government has already taken a record $2.3 billion loan from Jeddah-based Islamic Trade and Finance Corporation (ITFC) to meet the need for US dollars to import fuel.
However, it was estimated that $1,400 million would be needed this fiscal year. It was $800 million in the last fiscal year.
BPC said the ITFC loan will not be used to import refined oil or diesel; instead, it will be used to import crude oil only.
Although the USD crisis in the energy sector is an open secret, government officials are reluctant to officially disclose it in the media. Three senior BPC officials, who spoke to this correspondent on condition of anonymity, admitted that diesel import has become riskier as the USD crisis deepened. International suppliers are not willing to send oil to Bangladesh.
In this regard, State Minister for Power, Energy and Mineral Resources Nasrul Hamid recently told reporters that the dollar shortage in fuel import has become a major crisis and impacted the opening of LCs and paying bills.
However, regular discussions are going on with Bangladesh Bank (BB) to ensure the supply of dollars to the energy sector, he added.
Imports
According to BPC, the total yearly domestic demand for fuel oil is around 6.5 million tonnes. Of that, 43 lakh tonnes of diesel is imported.
This diesel is supplied by Kuwait Petroleum Corporation, Malaysia's Petco Trading Labuan Company, Emirates National Oil Company (ENOC) of United Arab Emirates, PetroChina International (Singapore) Pte Ltd and Unipec (Singapore) Pte Ltd of China, Bumi Siak Pusaku (BSP) of Indonesia, and Numaligarh Refinery Limited of India.
Apart from diesel, these companies supply furnace oil, kerosene, jet A-1, lube oil and marine fuel to Bangladesh. On average, 13-14 shipments of refined oil are imported per month and 16-17 shipments are brought if the demand rises, according to BPC.
The ship “MT Dai An” arrived at Chattogram Port on March 4. But due to the outstanding bills, supplier Unipec blocked the release of 33,000 tonnes of oil. If there is a delay, the penalty is $32,000 per day.
Solution sought
BPC chairman ABM Azad recently sent a letter to the Energy and Mineral Resources Division, in which he mentioned that the payment of fuel oil import bills is being delayed due to the scarcity of dollars.
He requested the Prime Minister's Office, BB, Finance Ministry and other concerned agencies and departments to take emergency action.
According to BPC, the fuel bill was $252 million in arrears as of March. Currently, it has exceeded $350 million.
Of the total, Singapore-based energy company Vitol will get the most — $120 million. ENOC will get $63 million, Indonesia's BSP $43 million and IndianOil Corporation Limited $30 million.
The BPC chairman in the letter also said that the payment has been delayed since June last year. Afterwards, ENOC revealed the inability to supply oil last September.
Participation in BPC’s oil import tenders is also decreasing. BPC floats tenders every six months.
It was found that seven companies participated in the tender to supply oil from January to June last year. It was five companies that bid to supply oil from January to June this year. Many are now imposing different conditions before participating in the tender, such as timely bill payment.
According to the contract, the supplier has to pay the bill within 30 days from the fuel loading day. Otherwise, BPC will have to pay a 5.22 per cent late fee per day.
BPC in the letter also said that no private bank has been opening LCs. Sonali, Janata and Rupali banks are opening four-five LCs per month against the necessity of 15-17.
