The government is going to take hard-term loans worth more than US$ 1.5 billon to implement development projects and maintain uninterrupted fuel oil imports after it failed to woo the multilateral donors to provide soft loans. The projects include 275 megawatt thermal power plant at Barapukuria and 365 megawatt combined power plant at Ghorashal. They will be implemented with around US$ 450 million dollar loan at 6 per cent interest rate from the Chinese Industrial and Commercial Bank.
The government committee on hard-term loan is scheduled to review the loan proposals on Wednesday after the economic relations division failed to convince the multilateral donors like the World Bank and Asian Development Bank to bankroll the crucial projects in the power-starved country.
Finance minister AMA Muhith will chair the meeting that is expected to review a proposal for taking a record US$ 900 million suppliers’ credit from four companies of the East Asian countries for the import of fuel oils.
State-owned BPC has already submitted proposals to the committee for approval, said its chairman Eunusur Rahman.
Petco-Malaysia, Petro-China, PNOC-EC of the Philippines and Unipec of Singapore have agreed to provide US$ 300 million, US$ 250 million, US$ 200 million and US$ 150 million respectively in the current fiscal year, he said.
BPC was struggling to meet the surging demand of oil of more than 5 million tonnes, three-times higher in less than five years, due to costly and oil guzzling rental power plants. The annual fuel import bill reached US$ 6 billion.
Experts said the surge in hard-term and suppliers’ credits over the last few years would push up the country’s foreign debt repayment bill to over US$ 2 billion in the coming fiscal year.
The government had to pay US$ 1,131 million in the outgoing fiscal year to meet debt obligations against foreign loans worth US$ 59.31 billion taken from the country’s bilateral and multilateral donors since independence.
The rate of interest for soft loan is 1 per cent, but more than 6 per cent annually for the hard-term loans.
Debapriaya Bhattacharya of the Centre for Policy Dialogue said the government relied on hard-term loans due to falling aids from the donors.
The interest rate and conditions of such loans are stiff, he pointed out.
Local government division will seek approval for US$ 150 million and US$ 40 million loans from the ADB and OPEC fund to implement the Third Urban Governance and Infrastructure Improvement project.
Former caretaker government adviser Mirza Azizul Islam said the swelling debt repayment bill and the shrinking soft-loan would put pressure on the country’s balance of payments.
Loan on easy term is still preferable for the country for keeping the repayment bill at a tolerable level.
-With New Age input
