Widgetized Section

Go to Admin » Appearance » Widgets » and move Gabfire Widget: Social into that MastheadOverlay zone

HSBC Bank to fund oil import as alternative source

888The HSBC-led syndication is emerging as big alternative to funding the country’s lone oil importing organisation, BPC that pays around US$ 4.0 billion for its annual fuel imports.

The syndication comprising-HSBC, Citibank NA and Standard Chartered Bank- will fund U$400 million to the state-owned Bangladesh Petroleum Corporation (BPC) at a rate of 4.28 per cent for fiscal year 2014.

It is learnt that the BPC has been paying high interest for long for lack of alternative sources.

The deferred payment is also one kind of alternative sources, but it is also managed by the oil suppliers and thus keeping scope for charging high rate of interest for funding the BPC.

“The syndication is definitely a new source for us and it will help diversify our sources,” chairman of the BPC Md Eunusur Rahman told the FE Wednesday.

“We’ve already finalised deals with the syndication to borrow from HSBC-led syndication,” BPC chairman said.

Currently, the BPC is mainly enjoying loan facility from the Jeddah-based Islamic Development Bank. It also enjoys deferred payment system from the suppliers and the loans from the state-owned banks.

The BPC chief said this will help its bargaining power with the funding authorities, especially in terms of reduction in the rate of interests. “We’ve limited sources, for this reason our bargaining power was poor,” he added. The interest rate would not be more than 4.60 per cent in consideration of the LIBOR to borrow.

As per the syndication terms, the government would not bear any penalty in case the BPC fails to avail the committed loans.

Sources said the government every year borrows from the International Islamic Trade Finance Corporation, an arm of Islamic Development Bank (IDB), to procure around 5.5 million tonnes of petroleum fuel import.

But the interest rate of the ITFC loan is 4.65 per cent. The BPC would procure the loan in two separate instalments.

The first instalment of the $200 million out of the $400 million loan for November and December period this year and another instalment of $200 million would be effective from the period of January- April.

———————————

Source: Financial Express

Share This Post