Business

Petronas US$700m credit facility for Bangladesh

February 20, 2013

DHAKA, Feb 20 — Bangladesh Petroleum Corporation (BPC) has been granted a US$700 million six-month deferred payment facility for oil from Malaysia’s Petronas.

Under the deal, the first month will be interest-free and the next five payments will have a rate of 4.5 per cent, down from the previous deal’s 5.05 per cent.

State-owned BPC, the country’s heavily subsidised sole oil importer and distributor, has to buy its oil on credit and sells to the domestic market at much lower rates than the import prices.

Saddled with this subsidy burden, the government raised fuel prices by up to 11.5 per cent last month.

BPC is also in talks with Philippines National Oil Company (PNOC) for a US$400 million facility at the same rate, a senior BPC official said.

Petronas will supply 460,000 tonnes of gasoil, 240,000 tonnes of fuel oil, 120,000 tonnes of jet fuel and 20,000 tonnes of kerosene in 2013.

Bangladesh is also receiving US$2.2 billion of loans this year from the Islamic Development Bank (IDB) to help to finance oil imports.

The country’s demand for fuel is growing sharply after a shortfall of natural gas forced it to turn to oil-fired power plants to resolve electricity shortages.

Its oil imports are likely to rise to 5.7 million tonnes in 2013, from nearly 5.4 million last year, the energy ministry has said.

Other than Petronas and PNOC, Bangladesh buys refined oil products from companies including PetroChina, Kuwait Petroleum Corporation (KPC), Emirates National Oil Company (ENOC), Egypt’s Middle East Oil Refinery and Vietnam’s Petrolimex.

BPC will also buy 700,000 tonnes of Murban crude from Abu Dhabi National Oil Company and a further 700,000 tonnes of Arab Light crude from Saudi Aramco in 2013 for its sole refinery. — Reuters

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