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Groundbreaking finance deal for oil

(L-R) Dr. Waleed Al-Wohaib, CEO of ITFC, Mr. Mohammad Mejbahuddin Secretary, Energy and Mineral Resources Division, and Mr. Md. Abubakar Siddique, Chairman of Bangladesh Petroleum Corporation (BPC)

The International Islamic Trade Finance Corporation (ITFC), a member of the Islamic Development Bank Group, signed a $855m Import Finance Murabaha Agreement with The People’s Republic of Bangladesh (represented by the Energy & Mineral Resources Division) and Bangladesh Petroleum Corporation (BPC)  for the import of crude oil and refined petroleum products. The agreement brings together a total of 28 financial institutions, including ITFC, as participants, which is considered a landmark achievement for being the largest syndication raised by the ITFC for a single client.

This cooperation is in line with ITFC’s mandate to support member countries’ strategic sectors and to improve their trading capacity, and is part of the approved $2bn 2012 annual financing plan to be provided by ITFC to Bangladesh. The total ITFC funding represents one third of the country’s annual financing requirements, which currently stands at about $6bn. This accomplishment also demonstrates the good standing that the Government of Bangladesh enjoys in  the market as one of the most credible investment opportunities supported by the sovereign credit rating by reputable rating agencies  (BB- and Ba3 by Standard and Poor’s and Moody’s respectively).

ITFC succeeded to mobilise almost 90per cent ($755m) of the total amount from external banks for this trade finance operation. This exemplifies ITFC’s reputation in the market by fostering strong partnerships both locally with Bangladesh Bank but also regionally and internationally thus putting Bangladesh in the map for international investment.

The agreement was signed during a ceremony at Ruposhi Bangla Hotel in Dhaka, between Dr Waleed Al-Wohaib, CEO of ITFC, Mohammad Mejbahuddin, Secretary, Energy and Mineral Resources Division, and Md. Abubakar Siddique, chairman of Bangladesh Petroleum Corporation (BPC). Moreover, the Advisor to the Prime Minister for Power and Energy and State Minister for Power and Energy witnessed the signing, along with high level officials from the Energy & Mineral Resources Division, BPC, Bangladesh Bank, Economic Relations Division and ITFC.

Commenting on the signing, Dr. Waleed Al-Wohaib said, “This ground-breaking $855m syndicated Murabaha financing is the result of a long-lasting partnership built over the years on trust and close collaboration with the Government of Bangladesh. Bangladesh is a successful story that will be replicated in other member countries. The sheer number of participants across different continents clearly demonstrates the attractiveness of this financing in the money market and the good standing that the Government of the People’s Republic of Bangladesh enjoys particularly in light of the sovereign credit rating.”

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