by Masud Milad in Prothom Alo, Jan 19, 2023 Chattogram: The unloading of commodities from three freighters has been stalled at Chattogram seaport for different terms as the banks here have failed to settle the import bills in dollar despite receiving full payments from the importers in the local currency.
The ships carried unrefined sugar and edible oil, two essential commodities during the holy month of Ramadan, to Bangladesh from Malaysia and Brazil.
The volume of products is around 54,000 tonnes while the import cost is USD 35.1 million. S Alam Group of Chattogram and Meghna Group of Dhaka imported the commodities to meet the high market demand during the Ramadan.
It was learnt during conversations with the importers and other officials concerned that the commodities were imported after opening letters of credit (LC) in the local banks. As per the rules, the importers opened the LCs using the local currency and the banks were supposed to settle the import bills in dollar.
But, the banks could not pay the import bills due to the ongoing dollar crunch, which eventually obstructed the way of commodity unloading from the ships.
Industry insiders voiced concern over the situation and said it is worrisome to face difficulties in imports due to the dollar crisis. The demand for edible oil, sugar, lentil and other essentials would soar during the upcoming Ramadan in the second half of March.
They feared that the commodity prices may see another jump if the dollar crunch continues to hinder imports this way. The number of LCs for importing Ramadan essentials already dropped by a remarkable extent this year.
Mostafa Kamal, chairman of Meghna Group of Industries, told Prothom Alo, “We opened LCs for importing commodities at earlier so that there is no crisis during Ramadan. The import bills have been paid in the local currency. But the failure to unload products is now increasing fines.”
Stuck at port for 54 days
MT Super 40, one of the three cargo ships, reached the outer anchorage of Chattogram port on 25 November, with 12,000 tonnes of palm oil from Malaysia, according to customs and port sources. S Alam Super Edible Oil Limited imported the oil worth USD 12.4 million. More than 54 days have elapsed after the ship’s arrival, but the consignment is yet to be cleared.
It was learnt that the importer is now counting USD 16,000 per day in fine and it will continue until the commodities are unloaded from the ship. It means the company paid a fine of USD 86,4000 or around Tk 91 million in the last 54 days.
A bulk carrier, MV Common Atlas, arrived at the Chattogram port on 5 January, with 60,500 tonnes of sugar from Brazil. Some 23,650 tonnes of sugar were cleared from the ship before the exporter stopped unloading on 11 January citing non-payment of import bills.
Later, the 200-metre freighter docked at the jetty on Monday, but it was sent to the outer berth again without unloading the sugar.
The importer is counting USD 40,000 in fine per day for the delay in unloading. The fine totalled USD 280,000 in seven days since 11 January.
The third one of the ships waiting at the Chattogram port is MT Sogan. It carried unrefined soybeans from Brazil for Bangladesh Edible Oil and Meghna Oil Refinery Limited and reached here on 6 January.
The soybeans of Bangladesh Edible Oil were cleared immediately, but that of Meghna Oil Refinery remained stuck due to non-payment of import bills. Meghna Oil imported 5,000 tonnes of oil at USD 6.2 million and is now counting a daily fine of USD 38,000 for the delay in unloading.
Earlier, another importer, TK Group, had to wait for 10 days to get the goods cleared from the ship.
Worries over the supply
According to the Bangladesh Trade and Tariff Commission (BTTC), the country has a monthly demand of 170,000 tonnes of edible oil and it jumps to 250,000 to 300,000 tonnes during Ramadan. The regular monthly demand for sugar is 150,000 tonnes and it soars to 300,000 tonnes during the month of fasting.
This time, there are concerns over the commodity supply during the upcoming Ramadan as the number of LCs dropped significantly.
The Bangladesh Bank data shows that the number of LCs involving imports of unrefined sugar dipped by around 28 per cent in the October-December quarter compared to the previous year.
Also, LCs of unrefined soybean oil fell by 47 per cent while that of soybean seed fell by 83 per cent, gram by 47 per cent and date by 30 per cent. However, the number of LCs may rise in January.
The traders usually import Ramadan essentials three months before the month of fasting. They refine oil and sugar and release it in the market via wholesalers.
Mezbaul Haque, the spokesperson of Bangladesh Bank, said nobody reported to them about the suspension of commodity unloading due to the LC complications. If anyone reports, the regulator will take the necessary decision considering its importance.
Quick solution needed
The country has been in a dollar crisis for nearly 10 months. The greenback, which was at Tk 86 at the beginning of last May, now stands at Tk 107. The central bank is restricting imports to keep the dollar crisis under control.
It, however, issued repeated directives to keep LCs involving imports of daily essentials unhampered. But the number of LCs did not rise significantly.
Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said when the big groups are struggling to import, it is easy to assume the situation of others. Lower imports would lead to lower supply. The market is already feeling the impact of low sugar and wheat imports.
He said Bangladesh Bank is apparently failing to solve the dollar crisis. If it continues, the situation will deteriorate further. Foreign banks will turn away from guaranteeing against loans.
The noted economist sought effective measures to recover from the dollar crunch.
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