The New Nation - Internet Edition

Staff Reporter

Fund-strapped Bangladesh Petroleum Corporation (BPC) has been granted Tk 1,000 crore to help finance its oil imports, official sources said Wednesday.

The Finance Ministry approved the fund on Monday last on condition that the money must be spent only on oil imports, Energy Secretary Mohammad Mohsin told newsmen yesterday. BPC will have to pay an annual 3 per cent interest on the loan.

Earlier in April the government lent BPC Tk 1,000 crore for the same purpose at same conditions.

The government had earlier rolled out loans through bonds with a 5 per cent interest rate.

Mohsin said, BPC's "financial condition was miserable", as fuel prices kept rising on the international market. Oil rose to record US$124 a barrel on the international market.

BPC sought Tk 7,000 crore to finance oil imports for June to December.

Considering the continuous loss of the BPC as well as state subsidies, the government recently decided to raise fuel price. The government is now fixing the new rate of fuel oil, which is likely to be announced very soon.

The state-run petroleum corporation owes Tk 3,200 crore to different banks. In the last fiscal year, BPC had a Tk 3,500 crore deficit because of a wide gap between import bills and subsidised fuel prices.

The government had earlier repaid Tk 5,700 crore in liabilities of BPC to local banks. To this effect the government had to allocate special funds in the last budget.

BPC statistics say, the government pays Tk 35 in subsidy for a litre of diesel and Tk 34 for kerosene. The BPC was making profit by selling octane before. But it is now giving subsidy for octane, too.