DHAKA: Bangladesh is facing challenges in paying for imported fuel due to a dollar shortage. The state petroleum company, Bangladesh Petroleum Corp (BPC), currently owes over $300 million, as the country experiences an “alarming decrease in fuel reserves.”
Bangladesh Petroleum Corp (BPC) controls all fuel imports and marketing in the country, which has a population of nearly 170 million. To address the issue, BPC has requested that the government allow domestic commercial banks to settle dues with India in rupees.
Bangladesh’s dollar reserves have decreased by more than a third since Russia’s invasion of Ukraine in February last year, reaching a seven-year low of $30.18 billion as of May 17. As a country heavily reliant on energy imports, Bangladesh is grappling with power cuts resulting from the fuel shortage, which has significantly impacted its export-oriented garments industry.
In a letter dated May 9, BPC informed the power ministry about the inability of commercial banks to make timely payments for imports due to the shortage of foreign currency/dollars in the domestic market and the central bank’s failure to meet the demand for U.S. dollars.
An earlier letter in April warned that if fuel imports could not be made according to the May schedule, there could be disruptions in fuel supply throughout the country, with a significant decrease in fuel reserves.
No immediate response was received from the ministry, BPC, or the central bank when Reuters attempted to seek comments.
Bangladesh fuel imports
BPC imports 500,000 tonnes of refined oil and 100,000 tonnes of crude oil on a monthly basis. The April letter revealed that several fuel suppliers had either sent fewer cargoes than scheduled or threatened to halt supplies. Unipec, Vitol, ENOC, Indian Oil Corp Ltd (IOC), PetroChina, and Indonesia’s BSP were among the creditors mentioned in the letter.
A source within BPC, speaking anonymously due to the sensitivity of the issue, stated that several companies were considering stopping supplies or reducing the number of cargoes they deliver.
According to the May letter, BPC owes $41.1 million to India’s Numaligarh Refinery Ltd for diesel and $147.2 million to IOC for diesel and jet fuel.
BPC has requested that Bangladesh’s nationalized commercial banks be permitted to settle dues with Indian companies in rupees. In September, Reuters reported that the State Bank of India had advised exporters to avoid settling deals with Bangladesh in dollars and other major currencies, instead favoring the taka and rupee currencies, as its reserves had declined.
Despite being one of the world’s fastest-growing economies for years, Bangladesh’s import bill and current account deficit have increased due to rising energy and food prices resulting from the war. In January, the International Monetary Fund approved loans of $4.7 billion for Bangladesh, and other countries in South Asia, such as Sri Lanka and Pakistan, have also sought or received IMF funds this year.
