BPC worried about smooth imports of fuel oil amid hassle for LC opening

Due to a price increase in the international market and complications in the opening of LCs, the payment of fuel oil is being delayed, said a Bangladesh Petroleum Corporation (BPC) report.

According to the report, the amount of arrears is increasing gradually due to the delays. If this situation continues, there is a fear of delay in the import of fuel oil as per the country's demand.

Meanwhile, the power division has also spoken about the need to increase the wholesale and retail prices of electricity to reduce the subsidy in the power sector in the context of the rise in fuel prices.

It said that if the wholesale price is increased by Tk1 per unit, the subsidy will come down by Tk9,000 crore annually.

These two reports were presented in the meeting of the parliamentary standing committee on the Ministry of Public Administration held on Wednesday at Sangsad Bhaban.

Referring to the high price of fuel oil in the international market affecting the import cost, the BPC in its report said - due to the increase in the import cost at the BPC end in the context of the abnormal increase in fuel oil price in the international market, the payment of the fuel oil price is being delayed by 10-50 days due to the contraction of the supply of dollars and the payment is being made step-by-step.

As a result, the arrears are increasing. If this situation continues, the import of fuel oil may be disrupted as per the demand.

Mentioning that private banks do not want to open LCs, the BPC report also said that private One Bank, Islami Bank Bangladesh Ltd, Eastern Bank Ltd, SCB, and HSBC banks have opened LCs in the past but have refrained from opening LCs for around 2 years.

At present BPC is importing fuel oil only through state-run Sonali Bank, Janata Bank, Agrani Bank, and Rupali Bank.

It is said that BPC usually imports about 4.54 to 5 lakh tonnes of refined and one lakh tonnes of crude fuel oil every month through about 14/15 LCs.

At present, due to the low dollar supply, in many cases, nationalised banks are also showing reluctance to open LCs as per the demand for BPCs.

Pointing out that some banks are delaying the opening of LC up to 10-15 days, the report said that if the state-owned banks show reluctance to open the LC, the import process may be disrupted and an energy crisis may occur.

The report also mentioned that the amount owed to fuel oil suppliers is $298.71 million as of 11 September.

Despite the cargo arriving at the Chittagong port at the specified time, due to the delay in payment, the supply company has imposed a financial hold on two ships, as a result, it is not possible to release about 60,000 tonnes of diesel.

Some $32,000 dollar has been imposed due to delay in product release.

Due to the dollar crisis, $241.18 million worth of LNG import price is unpaid till 13 September.

To resolve the crisis, BPC in its report recommended steps from the Bangladesh Bank and the Ministry of Finance to pay the arrears on an urgent basis to continue the import of fuel oil.

In this regard, this government institution has asked to ensure the opening of LC through private banks as before, besides giving the highest priority in terms of timely opening of LC and payment of price, considering the issue of energy security.

According to the report of the Power Division, due to the shortage of gas in the power sector, the increase in the price of fuel oil and coal in the international market and the depreciation of Taka against the dollar, and the difference in purchase and sale from IPPs and rental power plants, a possible subsidy of Tk35,000 to Tk37,000 crore would be required in the current financial year.

However, the report said that if gas extraction increases by 100 million cubic feet per day, the deficit can be reduced by Tk 6,000 crores.

At present, in view of the shrinking dollar supply, various types of complications are being created in opening LC through various banks for the purpose of importing fuel for running the power stations.

The report of the electricity department says that the fuel supply to the power stations is being interrupted due to the lack of proper maintenance of the fuel supply chain.

As a result, due to a shortage of fuel, power generation is disrupted as per the demand.

The Power Division has stated the need to increase wholesale and retail electricity sales prices in phases to resolve the crisis.

It said that if the selling price of electricity per unit is increased by Tk1 at the wholesale level, the amount of subsidy will decrease by about Tk 9,000 crore per year.