Since neither the central bank nor the nationalised commercial banks (NCBs) are able to meet the energy ministry's demand for foreign currencies to import oil, the ministry is resorting to borrowing up to $800 million from foreign banks.
The ministry requires about $2.0 billion this fiscal year to import oil. It has assurance of $1.2 billion as loans from two NCBs and the Islamic Development Bank (IDB) leaving it with a shortfall of $800 million.
According to energy ministry adviser Mahmudur Rahman, two foreign banks have proposed to cover the shortfall. It is now considering a proposal of $250 million commercial loan from the Standard Chartered Bank (SCB).
The ministry at first was reluctant to borrow from foreign banks due to higher interest rates and was trying to persuade the NCBs to arrange the total required amount of foreign currencies.
To find a solution to the crisis, the ministry yesterday held a meeting with the BB and the two NCBs, Janata and Agrani banks. It proposed the BB to provide the Janata and Agrani banks with fresh supply of dollars so that they may provide the ministry with larger loans.
Officials of both Janata and Agrani said they are unable to provide more than $500 million.
The central bank officials told the energy advisor that it may provide partial amounts as over draft (OD) to the NCBs from time to time, that too after getting the governor's consent. Since the forex reserve is frequently inadequate in the country, it may not be able to meet the ministries need for foreign currencies always on time, said BB officials at the meeting.
But the NCBs declined the offer of ODs, as they will have to return the ODs in foreign currencies along with interests. They however proposed the central bank to sell the required amount of dollars to them.
The central bank also suggested a number of ways to procure dollars on a short-term basis to the energy ministry including borrowing from foreign banks. Besides, the BB suggested some alternative arrangements for collecting foreign currencies like taking loans from companies like the Dhabi group of Abudhabi in the Middle East.
Following the meeting Mahmudur Rahman told reporters that the SCB and the Hong Kong Sanghai Banking Corporation (HSBC) have already proposed to lend $500 million and one of the banks' proposals is being sent to the Cabinet Committee on Economic Affairs. The interest rate on the loan will be LIBOR (London Interbank Offered Rate) + 1.97 percent.
Rahman however said the interest rate is not much higher than that of the IDB. IDB charges LIBOR + 1.75 percent as interest.
Since Bangladesh Petroleum Corporation (BPC) owes Tk 5,000 crore to the Sonali Bank, the bank has suspended opening LCs for the corporation. "We are considering issuance of bonds and budgetary allocations to raise the money that the BPC owes to the Sonali Bank. We will meet the finance minister to discuss the issue after the Eid," Rahman said.
