Bangladesh seeks $2b loan from IDB for fuel imports

The government has requested the Islamic Development Bank (IDB) to double its annual loan to US$2 billion for the next year in the wake of rising costs for import of fuel oils, sources at the Ministry of Energy and Mineral Resources said.

"Bangladesh has requested the IDB to increase the loan as we have become unable to cope with the spiraling oil prices in the international markets," said a high official of the Ministry of Energy and Mineral Resources, expressing anonymity.

The official said the country has received US$1billion loan from the IDB each year since 1997 under an agreement with state-run Bangladesh Petroleum Corporation (BPC), the state-run sole importer and distributor of oil.

He said Finance Adviser AB Mirza Azizul Islam, now attending the IDB's annual meeting in Jeddah, has requested for providing the increased amount of loan. The official also said that the government was requested to approve Tk 80 billion as subsidy for the BPC to meet fast growing oil import costs.

"It becomes almost impossible to bear the heavy burden of oil cost that is rising every day," he said.

The government raised diesel prices by about 21 per cent in April 2007 when crude oil was trading at US$67, he said. Oil is now trading at about double that price.

Bangladesh imports 3.8 million tonnes of fuel every year, of which almost 80 per cent is diesel, officials said.

In the current 2007-2008 fiscal year to June, the country will need US$4.5 billion for oil purchases and repayments of loans bills. In the past fiscal year BPC spent US$3.2 billion on oil imports.