Dhaka (Platts)--27Nov2012/443 am EST/943 GMT
The International Monetary Fund has delayed the release of $141 million credit to Bangladesh by two months as the country has yet to carry out key reforms including domestic fuel price adjustments, a senior finance ministry official said Tuesday. The $141 million second tranche of a $987 million credit deal signed in April had been due for disbursement in November on the condition reforms to fuel prices, banking, stock market and revenue administration had been implemented, the official said. It has been delayed to January 2013, he added. As part of the deal, Bangladesh pledged to introduce a price adjustment formula for oil products in the domestic market that would fully reflect changes in international oil prices. The country also promised to take steps to contain growth in fuel subsidies given to state-run Bangladesh Petroleum Corp. and account for fuel import costs fully in the next budget, in order to prioritize spending on social and development projects and reduce price distortions. Bangladesh sought the loan to pay debts, mainly for oil product imports. It is interest-free and to be repaid within 10 years. Bangladesh launched a drive in mid-2010 to increase the number of oil-based power plants in the country amid fast-depleting natural gas resources, resulting in a significant increase in the volume of fuel imports. BPC purchases oil products from the international market and sells them at lower rates in the domestic market, resulting in significant losses. The IMF and World Bank have long called on Bangladesh to fix its domestic oil pricing policy to better reflect movements in international oil markets. The country last raised oil prices by up to 43% in 2011 via four hikes. Bangladesh meets almost all of its oil needs through imports, with BPC forecast to import 5.8 million mt of oil products in the 2012-13 fiscal year (July-June), up 13.72% year on year, Platts reported earlier. BPC incurs an estimated loss of Taka 22-23/liter on the sale of gasoil and kerosene and Taka 12/liter on furnace oil, a BPC official said earlier.--Mohammad Azizur Rahman, newsdesk@platts.com --Edited by Wendy Wells, wendy_wells@platts.com