No way to import oil from Russia

The government has been discussing at various levels to track down a way to import oil from Russia at a cheaper rate. It was even considering the use of an alternative currency to avail Russian oil in these trying times.

However, the string of discussions bore no fruit as a high-level meeting at the secretariat on Thursday reached a decision that it is quite impossible to import oil from Russia using an alternative currency, instead of dollars.

The US and European sanctions on Russia restricted use of dollars to import oil from the country. Russia expressed its interest to sell oil through its own currency, but Bangladesh will not be able to arrange the whopping amount of Russian ruble required for the import.

Besides, there is a fear that the purchase of Russian oil may damage Bangladesh’s international relations. The meeting, in such a backdrop, asked the energy and mineral resources division to look into whether any oil can be imported from any other countries at a cheaper rate.

The meeting was held on Thursday at the cabinet division to review the method of payment for import of goods. Commerce Minister Tipu Munshi presided over the review meeting while Food Minister Sadhan Chandra Majumder, Land Minister Saifuzzaman Chowdhury, State Minister for Power, Energy, and Mineral Resources Nasrul Hamid, Prime Minister’s Private Industry and Investment Advisor Salman F Rahman, among others were present.

Prime Minister Sheikh Hasina, at an ECNEC meeting on 16 August, ordered to assess the possibility of importing oil from Russia at a cheaper rate and find out a way to pay the price by exchanging taka with ruble. The recent discussions took place following the prime minister’s order.

Several participants of the high-level meeting said they discussed the advantages and disadvantages of importing oil from Russia.

Russia expressed its interest to export oil to Bangladesh in its own currency, but the import process is too complex. It will be quite difficult for Bangladesh to arrange the Russian currency to pay the price of imported oil. However, there is another option for paying the price in greenbacks, if Bangladesh wants.

Trade relations between Bangladesh and Russia are not strong. And most importantly – it should consider the possible impact on international relations while importing Russian oil.

Upon completion of the meeting, Salman F Rahman told the reporters that Bangladesh cannot import oil from Russia defying the sanctions. The oil price is rising and this is why it needs to be imported from nations where the price is low.

The commodity prices have been rising in the international market for several months due to the Russia-Ukraine war and economic recovery after the Covid shock. It pushed up the import costs.

On the flip side, the remittance inflow slowed down in the previous fiscal year. The increasing demand for dollars pulled up its exchange rate against the local currency from Tk 86 to Tk 95 while its price crossed the Tk 115-mark in the open market.

Bangladesh registered a significant fall in forex reserve to meet the excess import costs, which created a big deficit in the balance of payment. So, the issue of using an alternative currency to combat the dollar-crisis came to the fore.

A participant related to the pharmaceutical industry told Prothom Alo on the condition of anonymity that the decision to import oil from Russia must be made politically. It is also part of diplomacy. Besides, it should consider how the western world will react if Bangladesh imports oil from Russia. A decision should be made after reviewing all possible impacts.

The meeting also discussed how India is importing oil from Russia despite sanctions by the western nations. The Indian government categorically said they will do whatever is best for the interest of their people.

Commerce Minister Tipu Munshi said after the meeting that the government is planning to import oil and other food grains from Russia and Ukraine and pay the price through banks that are making transactions with the two countries.

He said some 24 global banks have agreed to open letters of credit (LC) to import food grains from Russia and Ukraine. He also noted that there is no ban on the import of fertilisers and food grains from Russia and Ukraine.

The meeting decided to look into the possibility of purchasing oil at a cheaper rate from other countries or purchasing oil from a third party.

Ahsan H Mansur, executive director of Policy Research Institute (PRI) said the US and European countries might be unhappy if Bangladesh imports oil from Russia. The government can discuss the issue with those countries and take their opinion in this regard.

He also said the best option for Bangladesh is importing oil from a third party. It might be India, China, or Turkey.

The Russia-Ukraine war has created a huge potential for drug export in Russia. The government, in Thursday’s meeting, sought to know whether the local manufacturers can grab the export potential or not.

Bangladesh exported drugs to Russia from 1993 to 2002. The drug traders said they will resume drug exports to Russia if there are trade potentials.

Beximco Pharma Managing Director Nazmul Hassan told Prothom Alo that no one now exports medicine to Russia. If the government cooperates, the traders will start the export process.

But it will take time as the drugs need to be registered in Russia. Besides, the process of export should be eased up, he added.

Salman F Rahman said, “A huge demand for drugs has been created in Russia. It is a great opportunity for us and we want to utilize it.”