No decision yet on conversion of Tk 274b BPC loan into subsidy

Dhaka,  Thu,  21 September 2017
Published : 14 Jul 2017, 21:58:11

No decision yet on conversion of Tk 274b BPC loan into subsidy

Rezaul Karim

Even though Bangladesh Petroleum Corporation (BPC) is pressing the government to convert loan worth Tk 274 billion into subsidy, it hasn't yet taken any decision on the issue, sources said.

"In November and December, 2016, we sent proposals to the ministry of finance (MoF) for conversion of BPC loan into subsidy," a senior BPC official told the FE.

"We are now scrutinising the proposal, but we have yet to take any decision in this regard," a senior finance ministry official told the FE.

He, however, said if the BPC's proposal is accepted, it will take time to complete necessary formalities, including loan write-up from the government exchequer.

Earlier, financial support was extended to the BPC due to mismatch between domestic and overseas prices of fuel oil. Such kind of financial support should not be treated as loan, according to the BPC.

The government provided over Tk 274.19 billion in credit to the state entity between the fiscal year 2007-08 and 2014-15. Interest thereof ranges from 3.0 per cent to 5.0 per cent, according to BPC data.

The corporation has been making profits since the fiscal year 2014-15 because of low petroleum prices in the international market and retaining its high prices in the domestic market, a source concerned said.

When contacted, a top BPC official recently said: "The previous fiscal support by the government should not be treated as loan as we sold different fuel products in the country at lower prices for not adjusting prices in line with their prices in the international market."

The profit-making BPC is now settling its debts to banks and financial institutions from its earnings on petroleum products, he said.

The government has directed the authority concerned to set aside Tk 346 billion for the implementation of proposed projects like the second unit of Eastern Refinery Limited, a new oil refinery at Payra Seaport and the Single-Point Mooring project, according to BPC sources.

The agency earned profits to the tune of over Tk 52 billion in the fiscal year 2014-15 and over Tk 70 billion in the fiscal year 2015-16.

Besides, it provided Tk 10 billion and Tk 12 billion to the government as profits in the fiscal years 2015-16 and 2016-17 respectively.
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