Officials from the finance ministry in Bangladesh are to meet their counterparts in the energy and minerals resources ministry to discuss problems encountered by Bangladesh Petroleum Corporation (BPC) while trying to open letters of credit (L/Cs) for fuel imports.

A meeting scheduled for 27 April will focus on difficulties BPC has been experiencing trying to make local currency payments for fuel imports to the Agrani and Janata banks. They say they are having problems accepting BPC's requests for L/Cs because they do not have sufficient US dollars in their reserves.

Official hopes

An energy and mineral resources division official, Mahmudur Rahman, says he has asked the Bangladesh Bank (BB-central bank) governor Saleh Uddin Ahmed to help out by making around US$330 million available for opening L/Cs for fuel imports over the next two months.

Rahman reportedly says BPC can get around US$250 million each from the Islamic Development Bank (IDB) and Standard Chartered Bank (SCB) in July, but during May and June, the state-owned petroleum company will face a US$330 shortfall because of insufficient foreign currency reserves.

Officials at the energy and resources ministry say that the credit available from IDB and SCB will last for three months, from July to September.

Fixed prices

For its part, the state-owned oil importer is hard pressed to fund the increasingly high cost of fuel imports since the state fixes the BPC's selling prices.

Any increase in wholesale and retail fuel prices would have to be approved by government, which has not yet taken a decision on whether to increase prices in the wake of record international oil and refined product prices.

With around US$3 billion in reserves, the central bank appears well place to help BPC's short-term US$330 million funding shortfall.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.