The New Nation - Internet Edition

Staff Reporter

Finance and Planning Adviser Dr Mirza Azizul Islam had said the Government would take a $200 million loan from the Islamic Development Bank (IDB) in a considerably higher interest rate to fund the BPC's oil imports.

"The IDB has insisted the interest rate should not be less than 5.5 per cent, whereas we offered to pay 1.75 percent on top of the LIBOR (London Interbank Offered Rate)," said Mrza Aziz while talking to media after the meeting.

"We have no alternative to borrowing from the IDB regardless of the rate, we must import oil as soon as possible," he added.

According to him, the Government was trying to get the loan to meet the liquidity crisis of already cash-strapped BPC, added Mirza Aziz. "We will have to take the loan even at higher rate," he said.

BPC needs an immediate injection of funds to stave off acute fuel oil shortages in the country, said Chairman of the state-owned entity, Anwarul Karim.

According to him, current fuel stocks would last another month at the most, which meant the caretaker government had to take out loans to fund imports of petroleum within the period.

The Caretaker Government now needed both the IDB and Standard Chartered loans to build sustainable oil stocks for the country, he added.

The BPC chief also added that the central bank had already supplied the Government with a $300 million fund for petroleum imports through nationalised banks, and further funds were not possible from the institution.

"That is why we have had no alternative but borrowing funds from foreign banks at high interest rates," said BPC Chairman.

IDB has been a major fund provider, over one billion dollars per year, to BPC since 1977 with highest interest charged at LIBOR plus 1.75 percent, he added.

On the meeting, Government had also approved another loan of $ 300 million for BPC from Standard Chartered Bank on March 31 this year at LIBOR plus 1.79 per cent.

"The prices of petroleum products were not adjusted to avert a new shock on the economy after the two recurrent floods and cyclone Sidr," said Finance Adviser.