BPC plans 8% interest on railway’s unpaid fuel bills

Bangladesh Petroleum Corporation (BPC) is likely to charge eight percent interest on the outstanding fuel bills stuck at the railway agency.

The state-owned lone petroleum organisation is planning to impose the penalty to realise its fuel bills and eliminate the tendency to not pay bills before they become due.

An inter-ministerial meeting between the power, energy and mineral resources ministry and the railways ministry will be held on Wednesday to finalise the matter, said a source at the BPC.

As per the sales and purchase agreement, the railway agency is supposed to pay fuel bills within 15 days of delivery.

However, it has failed to pay the bill as per the contract. Sometimes, bills are not paid even for a year.

Therefore, the three fuel distribution companies under the BPC demanded to amend the sales and purchase contract with the railway by adding a provision to charge interest on the dues.

Clause 11(a) of the current contract reads, "In the event of failure by the railway for settlement of the bills against supply within the stipulated time mentioned above, the company may charge interest on outstanding bills as per the rate of Sonali Bank."

Fuel companies proposed to amend the clause with addition of the provision to claim interest on the outstanding bills.

Syed Mehdi Hasan, director (operation and planning) of the BPC, said, "Oil distribution companies buy energy with raw cash. However, they are incurring losses after distribution due to some big consumers like the railway."

Therefore, they raised the demand to impose interest on outstanding bills to recover the losses, he said.

According to the BPC, the east and west zones of the Bangladesh Railway owe it around Tk58.37 crore.

Of the amount, Padma Oil Company Limited's receivable is Tk17.23 crore, Meghna Petroleum Limited's amount is Tk17.80 crore, and Jamuna Oil Company Limited's amount is Tk23.32 crore. 

Md Shamsuzzaman, director general of the Bangladesh Railway, told The Business Standard they will accept whatever decision the BPC makes.

"We both are government organisations. If we pay fines to the BPC, the amount will eventually go to the state's coffers," he added.