Kuwait agreed Sunday to sell oil to Bangladesh on concessionary terms to help the impoverished country cope with soaring world prices, said Foreign Minister Morshed Khan.
The agreement came during talks between Kuwait's Emir, Sheikh Sabah al-Ahmad al-Sabah, and Bangladesh Prime Minister Khaleda Zia in Dhaka.
The emir arrived Saturday for a two-day visit and will go on to Thailand, India and Pakistan.
Under the agreement Bangladesh will import oil worth more than 750 million dollars and make payments 180 days later, Khan said, adding that Zia made the request for cheap oil when she visited Kuwait last month.
"Defintely, it's a great help for the country. And it is the easiest of terms," Khan said, when asked how much the deal would ease the oil price shock.
Bangladesh imports most of its refined petroleum products from Kuwait. In the first ten months of the fiscal year ending June 30, the country imported oil worth 950 million dollars from Kuwait. Bangladesh last week raised the prices of petroleum products by up to 33 percent to offset soaring global oil prices. But government officials said the subsidised prices were still far cheaper than global prices, leading to millions of dollars of losses every month. State-owned banks have almost gone bankrupt to finance government oil imports on credit.
In his budget speech Finance Minister Saifur Rahman said the government-owned oil company has a liability of 1.5 billion dollars to the banks because of imports on credit.
In the first ten months of the year, the company incurred losses worth 530 million dollars. The finance minister described the oil price rise as the "most formidable challenge" for the economy," adding that increased prices could "seriously affect our macroeconomic stability and create inflation."
Zia last month visited both Kuwait and the United Arab Emirates in search of cheap oil. Her four-party government faces elections in January. Kauwait has also agreed to give Bangladesh 6.50 billion taka (93 million dollars) from its Kuwait Fund to build two bridges, Khan said.
The fund also agreed to finance a 450 megawatt power station in the south-eastern port city of Chittagong.
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