All-out efforts on to clear $700m unpaid energy import bills

The state-owned energy agencies and banks concerned have been making all-out efforts to clear their overdue $700 million fuel and gas import bills in order to secure future supplies of primary fuels for power plants and industries.

To speed up the process of paying dues to international oil and gas companies and suppliers, Petrobangla and the Bangladesh Petroleum Corporation (BPC) have sought immediate interventions by the energy and finance ministries so that the central bank makes the required amount of foreign currency available to banks to settle the payments.

Petrobangla and BPC jointly owe around $700 million in unpaid liquid gas and fuel oil bills to global suppliers because of the dollar shortage.

A part of this amount has remained overdue for six months. Some international companies that supply gas, liquified natural gas (LNG) and refined fuel have expressed their inability to provide further delivery without recovering the outstanding payment.

Kazi Mohammad Mozammel Hoque, director (Finance) at the Bangladesh Petroleum Corporation, told The Business Standard, "A payment delay was there due to a foreign currency crisis. However, things are improving with the joint efforts of the Finance Ministry and the Energy and Mineral Resources Division."

State lenders say they are willing to help.

Md Abdul Jabber, managing director of Janata Bank, told The Business Standard, "Most of the dues of the BPC's imports through Janata Bank have been paid. The dues of two letters of credit (LCs) are being paid in phases. This situation has arisen because of the global crisis."

He said there is no shortage of taka. "It is taking some extra time to pay BPC's suppliers due to the foreign exchange crisis. But the situation is improving. Hopefully, other outstanding dues will be settled soon," said the chief executive of the state-lender.  

The bank needs at least $268 million to settle dues of BPC and Petrobangla for fuel oil and liquid gas.  

"Janata Bank is giving utmost importance to the imports of state institutions. Recently, an LC for the import of coal from Indonesia was opened for the Rampal power plant. Janata Bank is also preparing to pay the import bill on time," Abdul Jabber added.

Another state lender Agrani Bank also needs $114 million to pay off global suppliers of fuel and gas. 

Managing Director of Agrani Bank Md Murshedul Kabir told TBS that Agrani Bank has few overdue bills on the import of BPC. 

"Agrani Bank always gives special importance to the import of fuel oil and fertilisers. Foreign currency is being managed to pay off liabilities. Demand letters are being sent to the Bangladesh Bank regularly. The Bangladesh Bank is also providing support by providing dollars. So there is no particular issue here. Soon there will be no shortage of energy imports," the Agrani Bank MD said.

According to Bangladesh Bank sources, some foreign banks are not giving confirmation on the LCs opened by some Bangladeshi banks due to their inability to pay the bills on time. The Dubai-based Mashreq Bank and RAKBANK, in particular, are objecting to providing confirmation. It is worthwhile to note that state-owned banks have also faced such incidents. 

Discussions are on-going with these banks and it is hoped that the problem will be solved soon. 

As power supply has declined and load-shedding has worsened in the country amid sweltering heat, State Minister for Energy Nasrul Hamid on 4 June assured that the situation would improve in two weeks, saying that supply shortage of coal and gas, needed to produce power, is "only temporary." 

Meanwhile, deliveries from earlier coal contracts have got underway, with a shipment of 26,620 tonnes of Indonesian coal arriving at Mongla Port on Saturday for the Rampal Thermal Power Plant in Bagerhat.  In the second half of May, 60,500 tonnes of coal were delivered to the same plant.

In addition, coal deliveries through fresh letters of credit (LCs) are scheduled to reach the country on 25 June for the 1320 MW Payra power plant, whose two units are now shut due to a lack of coal.

Last week the Commerce Ministry, after a meeting with officials of the Bangladesh Bank, the National Board of Revenue (NBR) and the energy ministry, decided to allow individual companies to import coal worth $5 million on credit to meet the emergency fuel need without putting further pressure on foreign exchange reserves. The annual ceiling was $0.5 million earlier.

Although the situation marked some improvement in Dhaka during the weekend, power outages for longer periods — even for hours — have been reported from other districts and the countryside.   

Petrobangla owes $467m

Apart from state-owned gas companies' production, Petrobangla purchases gas from Chevron, which produces natural gas from Bibiyana and Jalalabad fields and also imports gas from Qatar and Oman and from the spot market in the LNG form.

The American multinational oil and gas company Chevron accounts for 62% of the total local production and 43% of the country's total gas consumption.

But since November last year, Chevron has not been getting payments from Petrobangla, which is to the tune of $219 million, according to a letter Petrobangla sent to the Energy and Mineral Resource Division and the Ministry of Finance last week.  

The letter notes that the amount receivable by Qatargas, the world's largest LNG company, stood at $69.07 million for supplying LNG under long-term contracts while Oman's OQ Trading Limited's receivable reached $54.66 million.

Long-term dues apart, the unpaid amount against spot LNG supply has reached $113.82 million.

Of the total unpaid dues, around $168.48 million is to settle by Janata Bank, $76.78 million by Agrani Bank and $3.54 million by IFIC Bank.

Petrobangla wrote to the Energy and Mineral Resources Division under the Ministry of Power, Energy and Mineral Resources seeking its help to settle the unpaid bills.   

BPC owes $235m

The Bangladesh Petroleum Corporation imports around 0.5 million tonnes of refined fuel each month from eight international suppliers — Kuwait, Malaysia, the UAE, China, Indonesia, Thailand, Singapore and India.

As of 6 June, BPC's payables to the six refined fuel suppliers stood at $234.93 million.   

Of the dues, the BPC owes $40.17million to the Chinese Unipec Singapore Pte Ltd, $99.67 million to Vitol, $8.82 million to Emirates National Oil Company (Singapore) Pte Ltd (ENOC), $5.39 million to IOCL, $56.89 million to Indonesia PT Bumi Siak Pusako (BSP), and $23.99 million to Malaysian PETCO Trading Labuan Company Limited (PTLCL).

In order to make the payments, the BPC sought $100.09 million from Janata Bank, $37.62 million from Agrani Bank, $44.02 million from Sonali Bank and $53.20 million from Rupali Bank.

Banks unwilling to open fuel LCs

The Bangladesh Petroleum Corporation used to open 17 to 18 LCs through state-owned banks and private commercial banks to import around six lakh tonnes of crude and refined fuel each month.

Since the Russian-Ukraine war broke out, five private banks — One Bank, Islami Bank Bangladesh Limited, Eastern Bank Limited, Standard Chartered Bank and HSBC Bank Bangladesh — have refrained from opening LCs for importing fuel.

Ali Reza Iftekhar, managing director and CEO of Eastern Bank Ltd, told TBS, "We have been opening BPC letters of credit for fuel import for a long time. However, for the time being, the process is being interrupted because of a foreign currency dearth. We will resume the process as soon as the dollar situation improves."

Apart from the private commercial banks, state-owned Agrani Bank denied opening more than one fuel LC.

In a letter to the Secretary of the Energy Division, BPC said the fuel supply system may fall in complexity if state-owned banks like Agrani refrains from opening LC.

Suppliers call for dues payments

In a letter issued on 26 May, Petco Trading Labuan Company Ltd (PTLCL) wrote to the BPC that the payment of $27.5 million remained due for the cargo delivered on 25 April.

"Despite PTLCL continuously following up with reminders and requests, to both BPC and its bank who issued the LC, to remit the debt payment to PTLCL, BPC's issuing bank still failed, neglected and/or omitted to make such payment to PTLCL nor has it given any explanation and/or reason for such delay even though PTLCL had submitted all the relevant documentation to BPC's issuing bank," the letter reads.

Besides, the PTLCL had also not been paid $23.9 million for the cargo it delivered on 17 May.

Meanwhile, PTLCL halted the discharge of Cargo 3 to the BPC, which was due to be delivered on 20-22 May, in light of BPC's failure to ensure payment for the previous cargo.

"With BPC failing to ensure the remittance of the necessary payment to PTLCL as per its agreed commitment, this has unfortunately placed PTLCL in a precarious position as to the certainty of payment receipt for the remaining future arrangements and deliveries," the suppliers wrote to BPC.