Bangladesh Petroleum Corporation (BPC) has decided to stop selling fuel to Biman Bangladesh Airlines on credit from tomorrow as its outstanding dues have hit around Tk 1,600 crore in the last eight years.
Padma Oil Company Limited (POCL), a subsidiary of BPC, supplies aviation fuel to different domestic and foreign airliners. The company has long been selling fuel on credit only to the national flag carrier.
On an average, POCL supplies jet fuel worth Tk 50 crore to the state-owned airliner every month.
According to POCL, the company sold fuel worth Tk 5,501.44 crore to Biman between February 2011 and December 19, 2017 and received total payment of Tk 4,405.3 crore on different occasions.
The arrears against sold fuel stand at Tk 1,096.14 crore, but the interests against the arrears reached Tk 504 crore since Biman failed to pay monthly bills on a regular basis, it alleged.
POCL General Manager (Accounts and Finance) Mohiuddin Ahmed told The Daily Star they have been selling fuel on credit only to Biman under special consideration.
Full payment was supposed to be made at the end of each month, but Biman always paid less, resulting in a pile of huge dues, he added.
They issued letters to Biman many times for the payment in vain, said Ahmed, adding that even several letters were sent to the Energy and Mineral Resources Division and the Ministry of Civil Aviation and Tourism through BPC.
The POCL on November 20, 2016 sent a letter to the Energy and Mineral Resources Division of the Ministry of Power, Energy and Mineral Resources, informing it about the dues.
Accordingly, the division on December 15, 2016 in a letter signed by Deputy Secretary Farzana Momtaz requested the secretary of the Ministry of Civil Aviation and Tourism to take steps to clear the dues and instruct Biman to buy fuel with full payment from 2017.
However, Biman continued its practice of paying less than the bill amount. During the first 19 days of this month, Biman purchased fuel worth Tk 41.88 crore but paid Tk 30.12 crore.
Considering the overall situation, they have decided to stop selling fuel to Biman on credit from New Year, said POCL GM Mohiuddin.
BPC Chairman Abu Hena Md Rahmatul Munim on October 26 sent a letter to the secretary of the Energy and Mineral Resources Division conveying the decision.
In the letter, the BPC chairman said if the current trend continued, Padma Oil would not be able to realise the dues in next several decades.
He also suggested that the division should request the Ministry of Civil Aviation and Tourism to instruct Biman to buy fuel on full payment and make an additional payment of Tk 34.66 crore every month from January 1 to clear the dues in next five years.
BPC Director (Marketing) Mir Ali Reza said they had made the decision after not getting any positive response from Biman even after alerting it several times.
“Since we are also counting interests against bank loan, we cannot take the responsibility of others' failure,” Reza added.
Contacted, Biman Bangladesh General Manager (Public Relations) Shakil Meraj yesterday said since it was weekend and he was out of the station, he needed a day to comment on the issue.
Biman Managing Director AM Mosaddique Ahmed said, “We received a letter from the BPC regarding the matter. We, through the ministry of civil aviation and tourism, wrote back to the BPC asking it to reconsider its decision taking into account that Biman is going through a liquidity crisis.”