BPC clears all dues as private banks supply dollars

Bangladesh Petroleum Corporation (BPC) was able to pay all their dues in just two months with the help of private banks. At the beginning of September, BPC owed $346 million to overseas suppliers. By October 29, the BPC authorities had cleared all their dues.
Officials of BPC said that in the past, foreign suppliers did not accept LCs (Letters of Credit) from private banks. Due to the dollar crisis in the country since last July and August, state-owned banks were not able to open new LCs for the import of fuel. State-owned banks were also unable to pay old LC payments. As a result, the amount owed by BPC to foreign suppliers was skyrocketing.
According to some top BPC officials, the government agency owed eight foreign fuel suppliers $406 million until August 12. On August 27, that debt rose to $420 million. At that time, some foreign companies stopped releasing fuel.
The foreign companies that BPC imports oil from are Singapore’s Vital Asia Private Limited and Unipec Singapore Private Limited, China’s Petro China Limited , Malaysia’s Petco Trading Labuan Company Limited (PTLCL), United Arab Emirates’ Emirates National Oil Company (ENOC), Indonesia’s PT Bumi Siak Pusako (BSP), and India’s Indian Oil Corporation Limited (IOCL), and Numaligarh Refinery Limited.
As the arrears in the state-owned banks increased day by day due to the dollar crisis, the BPC authorities started opening LCs with the private banks with the permission of various ministries of the interim government. As private banks were able to supply enough dollars against LCs, BPC arrears began to decline from early October.
BPC officials said foreign suppliers owed BPC $346 million at the beginning of September. By early October, BPC’s arrears had dropped to $110 million. BPC authorities cleared all dues to foreign suppliers on October 29.
Those concerned said that such incidents are rare in the history of BPC.
BPC Chairman Amin Ul Ahsan told The Daily Star, “We have been able to clear the dues quickly because of the cooperation of private banks in opening LCs. Despite our sufficient funds, we were unable to make payments to foreign companies due to dollar shortage in state-owned banks.”
Officials of BPC said that every month, BPC imports 15 parcels of refined oil and one parcel of crude oil. BPC needs about Tk 15 thousand crore of running capital per month to import various types of fuel oil.
Among the seven private banks where BPC opened import LCs, The Daily Star was able to get in touch with City Bank.
City Bank PLC Managing Director Masrur Arifin said that due to the dollar crisis in July-August, when government banks were unable to make LC payments, the import of fuel into the country was hampered.
“In such a situation, LCs were opened in City Bank at the request of the Governor of Bangladesh Bank and the Chairman of BPC. We responded to the call of BPC to protect the reputation of the country at critical moments. So far, we have opened LCs worth $132 million to BPC,” he said.
He also said that their position in foreign exchange is good due to high remittance flow and export LC in City Bank.