Govt is facing renewed uncertainty regarding the payment of oil-import bills to foreign suppliers due to a persistent shortage of US dollars. Suppliers of petroleum and oil products to Bangladesh, including Vitol Asia, are expressing concerns over payment arrears and have urged an immediate settlement. The state-run Bangladesh Petroleum Corporation (BPC) currently owes approximately $250 million in overdue payments to refined-oil suppliers.
This situation is not new, as the BPC encountered a similar financial crisis in July 2023. At that time, the BPC managed to partially clear some arrears with a loan from the International Islamic Trade Finance Corporation (ITFC). However, the payment situation has deteriorated again, as the central bank is not releasing US dollars to clear outstanding payments.
The BPC borrowed $1.40 billion from the ITFC in FY24 to cover fuel imports, with interest at the secured overnight financing rate (SOFR) plus 2.0 percent. This borrowing is expected to add financial pressure to the already fragile fiscal health of the BPC. Energy experts have criticized these high-interest loans, emphasizing the need to address pilferage and anomalies in the petroleum marketing system to avoid bankruptcy and further strain on foreign exchange reserves.
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