State-owned fuel oil importing organization Bangladesh Petroleum Corporation (BPC) is facing difficulties in importing fuel oils as the commercial banks are unwilling to open Letters of Credit (LCs) due to dollar exchange rate fluctuations. The financial organization division of the ministry issued a letter to Bangladesh Bank governor to take necessary steps.
The foreign currency exchange market has been unstable for the last one-and-half years and the banks have refused to open LCs for fuel oil import companies to prevent losses. As a result chances of a continuous supply for oil-based fuel are looking bleak. The power plants have turned to BPC in these times of crisis but even the state owned company is facing difficulty in opening LCs.
Given the circumstances and possibility of fuel crisis, BPC Chairman Ms Shamsur Rahman issued a letter to the finance secretary requesting the ministry’s financial organizations to direct the central bank’s Governor Fazle Kabir to take necessary steps to mitigate the situation.
Meanwhile, the central bank spokesperson Md Sirajul Islam claims that dollar crisis has almost been resolved.
There was a bit of a crisis in the last three or four months but now it’s resolved, he told Bangla Tribune. “The banks know best why they are refusing to open LCs for BPC.”
Sources said that a few foreign and private banks have been refusing to open LCs for BPC citing the dollar crisis. Although Islami Bank had opened an LC in August, currently they claim that they are unable to do so. On the other hand, the state-owned banks have cited financial losses for their refusal.
The letter read: “To continue the import of fuel oil and pay off the ITFC loan on time, it is imperative that the banks issue LCs.
“BPC imports fuel oil at through the state-owned and private banks and suppliers at government prices throughout the country. The banks have been supporting BPC for a long time now but for the last five or six months, HSBC, Standard Chartered, City Bank have cited N/A and Brac and One Bank have cited dollar crisis for their refusal to issue LC
“Although the state-owned Sonali, Janata, Agrahani and Rupali banks opened LCs they claim that they are incurring losses due to the exchange rate crisis.”
It said that since the central bank has been unable meet the foreign currency demand, ITFC loans repayment and LC payments are being delayed by 10-12 days. If LCs are not issued, the fuel supplying company will have to pay late charges and indemnities for financial holds of cargoes.