Biman faces cash crunch | The Daily Star
12:50 AM, August 12, 2013 / LAST MODIFIED: 12:39 PM, August 12, 2013

Biman faces cash crunch

Unable to pay fuel bills regularly; arrears stand at Tk 724cr; Padma Oil threatens to stop fuel supply

Cash strapped Biman owes so much money to Padma Oil for aviation fuel that the oil company has threatened to cut off fuel supply.
As of July 24, the national flag carrier owed Padma Oil Company Ltd, a subsidiary of Bangladesh Petroleum Corporation (BPC), an all-time high of Tk 724 crore.
Not getting paid for fuel, Padma Oil's Deputy General Manager (aviation) M Enayet Kabir Chowdhury in a recent letter to Biman said the company may not be able to ensure smooth supply of fuel during the hajj flights when fuel demand rises.
The Biman chief, however, reassured The Daily Star that the hajj flights would go smBiman faces cash crunchoothly.
Padma issued the warning after the Biman, which has been in the red for years, failed to keep its promise to pay fuel bills and the dues.
Officials in the oil company said Padma Managing Director Abul Khair had a meeting with Biman Managing Director Kevin Steele on May 8.
They said Steele had promised at the meeting that Biman would regularly pay all bills from then on and with every payment it would pay some of the previous bills to reduce the money it owed to the oil company.
But Biman was not even paying for the fuel it consumed after May 8, let alone the crores of taka it already owed, the officials added.
The national carrier paid Tk 37 crore against a bill of Tk 58 crore in May,  Tk 36 crore against Tk 56 crore in June and Tk 30.07 crore against Tk 47 crore bills till July 24.
The fuel bills have actually been piling up since December 2007 when the government turned Biman Bangladesh Airlines into a public limited company.
Biman's non-payment of bills was putting extra strain on the state-owned Bangladesh Petroleum Corporation.
An official at Padma Oil wishing anonymity said, “The BPC imports lubricants borrowing money from foreign lenders on high interest. It would not have to borrow or only borrow a small amount had Biman paid its dues.”
Biman MD Steele could not immediately provide The Daily Star with the latest information about the dues. However, in an email, he admitted that he had a meeting with Padma officials in May and had made a commitment about paying regularly.
He also claimed that as far as he had been aware, the payments were being made regularly.
About the Padma Oil letter, Steele said he had not recently received any letter from Padma and gave an assurance that there would be no problem with fuel supplies during the hajj flights.
In the fiscal year 2012-13, Biman incurred a loss of Tk 606 crore, in 2011-12 Tk 545 crore, in 2010-2011 around Tk 200 crore, in 2009-10 Tk 80 crore.
Biman made a small profit in 2008-09.
As of last April, Biman also owed Civil Aviation Authority of Bangladesh Tk 367.62 crore.

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