Prime Minister Sheikh Hasina has directed the relevant ministries and departments to figure out a way to import fuel oil from Russia in their own currency.
The PM gave the order during the Executive Committee of the National Economic Council (Ecnec) meeting on Tuesday. Planning Minister MA Mannan briefed reporters after the meeting.
According to the prime minister, if India can import oil from Russia amid US sanctions due to the Russia-Ukraine war, why can't we.
Earlier on 7 July, the prime minister had said the war affected the whole world while the sanctions on Russia by the West disrupted the global supply chain, urging the US to steer away from punishing the people of the whole world in a bid to punish one country.
Earlier, Russia also offered to sell its oil to Bangladesh, State Minister for Energy Nasrul Hamid said in May. But Bangladesh could not make use of the offer as the country's lone refinery is not designed to process Russian crude for its higher thickness.
Energy experts suggested that Bangladesh should opt for getting Russian oil refined in India at a discounted rate.
After Tuesday's Ecnec meeting, Planning Minister Mannan said in the wake of the current global dollar crisis, the PM has instructed the Ministry of Finance and the Bangladesh Bank to take strategies for swapping currencies to import and export from other countries, including Russia.
He said many countries have already started doing business with other countries by exchanging their own currencies and this was the way to go.
State Minister for Planning Dr Shamsul Alam said the US had relaxed its ban and Germany was buying energy from Russia. India was also importing fuel from Russia, something it had never done before. This meant the US was allowing India to import the fuel from Russia and considering that, Bangladesh would also try to import oil from the Russian Federation.
He also said food was a sensitive product, so they remained out of the purview of the ban. As food ships had begun leaving Russia, imports from Russia could be made easier.
Shamsul Alam said the dollar crisis was going on not only in Bangladesh but all over the world.
Currency, a currency swap was needed to deal with the crisis. For example, in the case of import and export with China, China will take taka and Bangladesh would take yen. He, however, said currency swaps with bigger economies could be a problem but the Bangladesh Bank and the finance division were working on it.
"The problem with currency swaps with major economies is that we can import in their currency. But because of the trade deficit, they will lose a lot of money. We have three-and-a-half times more imports with India. As a result, the demand for the Indian rupee will increase three-and-a-half times. The demand for taka in India will, however, not be so high."
He said another option was to import from Russia and pay later at no interest. The state minister said they would wait to see what would happen.
Former ambassador M Humayun Kabir asked if it was possible to import oil from Russia in its own currency within the ban. "If we import from Russia in rubles instead of dollars, we need to open a bank account in rubles for payment. But first let's see how much we will benefit from the decision of import," he said.
Flow of Russian oil despite Sanctions
The US and its Western allies sanctioned Russia to cut it off from international markets and reduce its ability to fund and supply its war against Ukraine since 24 February this year. Restriction on Russian oil and gas was among a slew of sanctions which made financial transactions with Russian banks difficult for the rest of the world.
But the sanctions proved "selective" as the Western countries kept avenues open for securing their supplies of essentials including oil and gas, fertilisers and agricultural products. The European Union chose to delay such an embargo until the end of this year as the 27-member bloc heavily relies on Russian oil and gas.
Rather Russia, in retaliatory move, slowed pipeline gas supply to Germany and to mainland Europe raising worries for future energy security there as Europe sourced 40% of its gas consumption from Russia last year.
Despite sanctions on financial transactions with Russia, several European energy companies are paying for gas via Russian bank accounts, which convert euros into roubles, insisting those payments are in line with sanctions, says a BBC report.
Meanwhile, India, China and even Saudi Arabia are importing Russian fossil fuels heavily taking advantage of the discount offered by Moscow to offset its lower sales in Europe. The discount was as wide as $13-$19 per barrel compared to that of the Middle Eastern rate, prompting India to increase its Russian oil imports by 4.7 times in April-May.
China also increased Russian oil purchases by 55 per cent in May, according to a Russian central bank report, which showed Russia surpassing Saudi Arabia as the top oil seller to China.
Both India and Saudi Arabia are benefiting from their oil exports to Europe after refining cheaper Russian oil.
PM for steps to alleviate people's suffering
Planning Minister Mannan said low-income earners were suffering due to the pressure of inflation. The PM had directed the finance ministry to take necessary steps to alleviate the suffering of the low-income earners.
He said the price of oil in the world market was decreasing and the government has already announced a price adjustment with prices expected to fall domestically.
Referring to the cost of imports at the Ecnec meeting, Mannan said Ukraine and Russia produce one-fourth of the world's food and food shipments have begun to leave Ukraine, it has reduced the price of food a little.
The World Food Organization says food prices will fall further, while no load sheddings are expected from September.
Claiming that the situation in the country is improving, the minister said the reserve of 40 billion dollars is becoming stable, while remittance flows are increasing and revenue collection was also good.
The minister said the World Bank and the International Monetary Fund had expressed fears of global recession amid the Ukraine-Russia war. It was a complicated war and it was uncertain when it would end.
In this situation,the government had some instructions to reduce the expenditure.
The planning minister said the PM had reiterated these instructions considering the current situation.
"The first step of the government is to be economical. It means careful spending as needed."
Meanwhile, Shamsul Alam said, "We don't know how long the war will last or if there will be a new war with another country. But we are much more stable than that. If there are two consecutive quarters of negative growth, then a country is said to be in recession.
"The two largest economies – the United States and the United Kingdom – have seen growth decline in two quarters. And two major economies are headed for recession. We have not had negative growth, rather it has increased. As a result, we can say for sure that we will not fall into recession. But if there is a slowdown abroad which may affect our exports. We have to be careful about this."
Md Touhid Hossain, a former foreign secretary, said, "Russia is collecting currencies of other countries, including China, India and Turkey under the sanctions. It remains to be seen how it will be possible for Bangladesh without the SWIFT system. Whether it will be possible for us to do what India is doing can only be said after the review."
He also said the US was unhappy with India's decision to deal with the Russians. But some European nations are also importing fuel from Russia.
"It cannot be said right now whether we will face any problems if we import from Russia."