AS PER a report published on Tuesday, the country is currently facing a critical challenge in maintaining a steady supply of petroleum products due to the backlog in Letter of Credit (LC) payments, compounded by forex shortage.
We are apprehended to know that the state-owned Sonali Bank PLC’s reluctance to open new LCs and clear existing dues for fuel imports managed by the Bangladesh Petroleum Corporation (BPC) underscores the severity of the situation.
With BPC owing nearly $297 million to various state-run banks, including $139.71 million to Sonali Bank alone, the potential repercussions on the country’s energy security are alarming.
We know fuel is the lifeblood of the economy, powering transportation, industry, and essential services.
Any disruption could have far-reaching effects, from halting industrial production to paralysing transportation networks, ultimately impacting the daily lives of millions of citizens.
Considering the gravity of the situation, the government should need to intervene to facilitate the opening of LCs and the clearing of outstanding dues.
This could involve the allocation of emergency forex reserves specifically for the import of essential fuels.
Bangladesh Bank should work closely with state-owned banks in this regard to ensure that the necessary foreign currency is made available.
Non-essential imports could be temporarily curtailed or subjected to stricter controls to free up forex for critical energy imports.
This would help stabilise the supply chain and prevent disruptions in fuel availability.
The BPC, on the other hand, in collaboration with the Ministry of Finance, should engage in negotiations with international suppliers to secure more flexible payment terms.
This could involve extending the payment deadlines or arranging for payments in instalments, thereby reducing the immediate forex burden on state-owned banks.
However, the government and BPC should explore alternative funding mechanisms to support fuel imports.
This could include seeking financial assistance from multilateral organisations or entering into bilateral agreements with fuel-exporting nations.
Such measures could provide a temporary buffer while the forex situation stabilises.
But we must remember that reducing dependency on imported fuels through investments in renewable energy, such as solar and wind, will not only enhance energy security but also shield the economy from similar crises in the future.
By addressing these issues head-on, we have to ensure that our economy remains resilient in the face of external shocks.
The time for action is now before the consequences of inaction become irreversible.