The Bangladesh Petroleum Corporation (BPC) has moved to forfeit a performance guarantee (PG) worth approximately $1.697 million (Tk 212.21 million) after US-based PetroGas International Corporation failed to deliver a contracted shipment of diesel and octane within the agreed schedule.

According to BPC officials, the state-owned fuel importer has instructed Shahjalal Islami Bank PLC to encash the guarantee after PetroGas failed to supply 125,000 metric tonnes of refined fuel comprising 100,000 tonnes of diesel and 25,000 tonnes of octane scheduled for delivery between July 5 and July 7.

PetroGas was awarded the contract on March 16 under the Direct Purchase Method (DPM), a procurement mechanism adopted during heightened disruptions in global fuel markets caused by the Middle East conflict and shipping restrictions through the Strait of Hormuz.

As part of the agreement, GCG Global Commerce Gateway Ltd submitted the required performance guarantee through Shahjalal Islami Bank on behalf of PetroGas on April 12. The company later nominated The City Bank PLC to open the letter of credit (LC) for the fuel shipment.

However, the supply process stalled after The City Bank obtained unfavorable credit reports on PetroGas from Creditlink Limited and Dun & Bradstreet (D&B), raising concerns about the company’s financial credibility, BPC officials said.

Industry sources said BPC had awarded contracts to more than a dozen new suppliers under the DPM during the peak of the Middle East crisis to secure emergency fuel supplies. While only a handful of companies, including PetroGas, submitted the required performance guarantees, none ultimately delivered petroleum products.

Some contractors reportedly did not provide the required guarantees despite receiving contracts, while others failed to make supply arrangements after obtaining notifications of award.

BPC Chairman Md Rezanur Rahman said the country’s fuel supply has since stabilized as regular overseas suppliers resumed shipments after earlier delays and force majeure declarations linked to the regional conflict.

Bangladesh primarily imports crude oil from Saudi Aramco and the Abu Dhabi National Oil Company (ADNOC). It also procures around half of its refined petroleum products through government-to-government agreements with suppliers from Kuwait, Singapore, China, Indonesia, India and Oman, while the remainder is sourced through international open tenders.