BPC scraps Biman's credit privileges for jet fuel purchase

Bangladesh Petroleum Corporation (BPC) will no longer supply jet fuel to Biman on credit as the national carrier owes the Corporation over Tk 421 crore in outstanding bills.

A recent top-level meeting decided that from now on, Padma Oil Company, a subsidiary of BPC, would supply jet fuel to Biman Bangladesh Airlines only in cash, official sources said.

Biman buys jet fuel worth Tk 15-16 crore from Padma every month. As per previous provision, Biman used to get the supply on a 30-day credit that was not followed on many occasions.

Officials said the meeting also decided that by May 31, Biman will pay the current financial year's dues, amounting to Tk 33.77 crore, to the BPC to begin the cash deals.

State Minister for Energy AKM Mosharraf Hossain presided over the meeting attended by State Minister for Civil Aviation Mir Mohammad Nasiruddin and officials concerned.

The meeting decided that the BPC in selling jet fuel to Biman will restore the provision of lump sum rebate for the national flag carrier that remained suspended since September, 1997.

However, the officials said this time the rebate will not be straight in certain percentage. Instead, it'll be given after every six months only if the state-run BPC can make profit.

The rebate will be calculated keeping only 20 per cent of the profit margin of BPC -- that is the difference between the total cost of import and supply, and the selling price.

Following a dispute between Biman and BPC authorities over the previously unpaid rebate, a four-member joint committee had been formed to resolve the matter, said an official.

"After the committee submits its report on the rebate dispute, a procedure will be sorted out to enable Biman to pay its dues to the BPC," said the official.

Before 1996-97, BPC was a profit-making concern and it used to award 20 percent rebate every six months. From January 1991 to June 1995, Tk 140.61 crore was awarded as rebate to Biman.

"At that time the local sale price was rational, compared to the purchasing cost and Biman was then a loss-incurring state organ," said the senior official.

But in 1996-97, BPC incurred a loss of Tk 427.45 crore that prompted the Energy Ministry to withdraw the rebate.

Biman says rebate amounting to Tk 130.91 crore remained unpaid but BPC put the amount at Tk 77.91 crore.

The four-member committee, comprising Moniruzzaman and Nurul Abedin of Biman, Sirajul Islam Chowdhury of BPC and Mominur Rahman of Padma Oil, is going to calculate the actual rebate amount following which the BPC will make the payment.

Sources said the BPC is badly in need of money as it incurred a loss of Tk 645.75 crore in 2001-02 and its cumulative loss stood at Tk 2,520 crore. That's why it's pressing for Biman's dues.

The BPC borrowed Tk 2,700 crore from commercial banks with high interest rates, which is another key reason why BPC is anxious to receive the payment of its dues from Biman, officials said.

They said Biman's total unpaid dues to BPC stood at Tk 421.31 crore, mainly for the period between 1996-97 and 2001-2002. However, Biman claims the amount is Tk 390.94 crore.