From $665m to just $10m: How Bangladesh almost rid itself of energy dues in a year

Highlights:

• Petrobangla cleared LNG import bills amounting to $94.5 million yesterday 
• Dues of Chevron, two long term LNG suppliers cleared
• FSRU bill also cleared
• Only $10 million spot LNG import bill remains unpaid
• All dues will be cleared today, Petrobangla said
• Higher remittance inflow  through state-owned banks helped

Within eight months of the interim government in power, Bangladesh has made significant progress in clearing the import bills of Liquified Natural Gas (LNG). Current outstanding bills have fallen to mere $10 million which was a staggering $665.76 million in 5 August last year.

Petrobangla said the remaining $10 million owed by OQT would be paid today.

Yesterday, Petrobangla cleared LNG import bills amounting to $94.5 million.

Of the amount, $62.54 million was paid to four spot market LNG suppliers and $32 million to QatarEnergy LNG through Jeddah-based International Islamic Trade Finance Corporation.

Of the four spot suppliers, Vitol Asia received $28 million, OQT $22 million out of $32 million, Excelerate LP $7.04 million and Gunvor Singapore received $5.5 million.

On clearing LNG import bills, AKM Mizanur Rahman, director (Finance) of Petrobangla, told The Business Standard yesterday, "We have a schedule of paying a $10 million outstanding bill to OQT tomorrow. We will become debt free then."

Earlier, Petrobangla cleared all import dues of Chevron and two FSRU operators.

Who owes how much?

On 5 August 2024, the outstanding bill of US oil and energy giant Chevron was $237.55 million which was fully cleared on 21 April.

The due bills of two long-term LNG suppliers – QatarEnergy LNG and Oman Trading Ltd  – were $317.48 million on 5 August last year, which now amounts to zero.

Due from spot buy was $110.73 million eight months ago, which now stands at $10 million.

Why the delay

Energy Division and Petrobangla officials said, for the past three years, they have had to face multifaceted difficulties in dealing with the oil and LNG suppliers over constant erosion of forex reserves which hindered paying import bills on time.

Sensing the inability to purchase oil and LNG in cash, oil and energy suppliers across the board charged higher prices and more in premium, assuming Bangladesh will not be able to pay the bill in due time.

What made the repayment possible

Energy Adviser Muhammad Fouzul Kabir Khan yesterday told TBS that clearing all dues required nothing but management. 

"Immediately after assuming office, I had taken steps to clear import dues as it was turnishing our image to suppliers as well as inflicting huge financial penalties on us because of late payment," he said.

"To arrange money, we ditched some of the unnecessary projects in this sector which helped create fiscal space. We were also very strict in checking waste, fraud and abuse like giving performance bonus, allowance and other things that helped save money," added the adviser.

Ensuring sovereign guarantee for banks also helped banks to arrange dollars and clearing past dues, he pointed out.

State-owned banks, which typically handle payments for Petrobangla, suddenly had enough greenbacks to clear backlogs.

The turnaround came as the central bank relaxed its grip, allowing banks to offer slightly higher rates to attract remittance inflows and other dollar sources. This flexibility, officials say, gave banks the leeway to accumulate foreign currency and channel it towards critical energy payments.

"It was mostly a liquidity issue," said a senior official of Janata Bank. "Once we could bid competitively for dollars, things started moving."

According to central bank data, in FY24, remittance inflow to the country's banks totalled $23.92 billion, with state-owned banks receiving $3.4 billion, or 14.23% of the total.

In contrast, in the three months following the interim government's takeover, the banking sector received $7.03 billion in remittances from August to October of FY25, with state-owned banks receiving $2.06 billion, or 29.27% of the total.