The petroleum corporation pursues immediate government approval for a fresh US$ 300 million loan from the International Islamic Trade Finance Corporation (ITFC) to finance fuel import.
A senior official of the state-run Bangladesh Petroleum Corporation (BPC) said the import of crude oil is necessary for uninterrupted fuel supply.
The BPC authorities sent a letter to the ministry of power, energy and mineral resources (MoPEMR) recently for taking necessary steps in this regard.
Earlier, the Standing Committee on Non-Concessional Loans had given approval for a total of US$700 million in ITFC credits.
The tenure of the loan is six months and the rate of interest (mark-up) 3.90 per cent including 0.20 ITFC administrative charge annually, lower by 0.30 per cent from the previous year's mark-up rate of 4.20 per cent, according to the BPC data.
An amount of US$500 million loan will be available on BPC's demand. Besides, the state-owned entity will take out up to US$200 million in loan from the ITFC to meet any contingency fund requirement, according to a BPC source.
Already spent is US$150 million out of the total US$700 million. "We sought necessary approval from the MoPEMR for US$100 million and US$200 million from the finance ministry," General Manager (Finance) of the BPC Moni Lal Das told the FE.
He, however, said new ITFC loan will be used to import crude oil mainly.
Of the amount, a counter-guarantee would be required for US$200 million out of US$300 million. Necessary approval for the remainder (US$ 100) would be needed from the MoPEMR, he also said.
A senior finance official said sourcing the fund from the International Islamic Trade Finance Corporation requires a guarantee from the central bank and a counter-guarantee from government.
"We will issue counter-guarantee for $200 million in favour of Bangladesh Bank to facilitate BPC's oil import and operations sometime next week," he told the FE.
"The counter-guarantee issued by the finance ministry will be considered a sovereign guarantee," the official said, explaining that the government took the responsibility of repaying the amount itself to the ITFC if the petroleum corporation failed to pay back the borrowed money.