Shipping Corp to invest $242m for fleet expansion
After experiencing colossal growth in the business through riding on new ocean-going ships, the Bangladesh Shipping Corporation is now going to expand its fleet with another four vessels at a cost of $241.92 million for future prospects.
As per the decision, the four ships – two crude oil tankers and two bulk carriers – will be procured from China under a government-to-government agreement.
Crude oil tankers have a capacity of one lakh deadweight tonnes each and each bulk carrier's capacity is 80,000 tonnes.
The crude oil tankers and bulk carriers will cost $151.96 million and $89.96 million respectively.
Mohammad Ashraful Amin, general manager (Admin) of the corporation, told The Business Standard, "The Chinese government will provide the loan as per a previous agreement."
In 2016, the Chinese government provided Tk1,500 crore for 20 years at 2% interest for the procurement of six ships.
The corporation received three ships in 2018, and another three ships in 2019.
At present, the Shipping Corporation owns eight ocean-going ships. But one ship got damaged in Alvia port by a missile attack amid the Russia-Ukraine war this year.
"A fresh contract will be signed to buy four new ships and the terms of the agreement have already been finalised. The deal will be done soon," said Ashraful Amin.
He said once the agreement comes into effect, the ships will arrive in the country in the next two to two and a half years.
Earlier the first ship "Banglar Joyjatra" arrived in the country in July 2018, just two years after the loan agreement was signed.
In October and December of that year, the Shipping Corporation received the two other vessels – Banglar Samriddhi and Banglar Arjan.
In the first five months of 2019, the three others – Banglar Agrajatra, Banglar Agradoot and Banglar Agragoti – arrived in the country.
New ships boost earnings
Ever since the addition of new ships to its fleet, the corporation has seen a huge jump in its revenue and profits, which has remained constant.
It has been blessed with a manifold increase in charter rates since the outbreak of the Russia-Ukraine war.
According to its financial statements, before the addition of six new vessels, the state-run institution's revenue was just Tk83 crore in fiscal 2018-17. But it saw a six-fold increase in revenue in a span of just five years. At the same time, profit also increased.
In fiscal 2021-22, the total revenue of the Shipping Corporation was Tk517 crore, which was 88% more than in the previous year, while net profit increased by 213% to Tk225 crore.
The company declared a 20% cash dividend for its shareholders, up 8% year-on-year, due to the increase in earnings.
Despite good profits in FY22, its net profit declined by 8% in the first quarter of the current fiscal year.
In the July-September quarter of FY23, its earnings per share (EPS) declined to Tk3.98, which was Tk4.34 in the same period of the previous year.
"Ship chartering has increased internationally. Currently, the corporation's ships are globally shipping products to major countries in America and Europe, which has increased revenue," said Mohammad Ashraful Amin.
Asked about the damaged Bangla Samriddhi at Alvia port in Ukraine, he said the war situation has not improved yet, due to which the vessel could not be brought back. It is still in that port.
"The ship is under insurance coverage. However, getting an insurance claim is a complicated process that will take time. But the issue of realising the claim is ongoing," he added.
Set up in 1972, the Bangladesh Shipping Corporation got listed on the capital market in 1977.
Soon after its establishment, two sea-going vessels - Banglar Doot and Banglar Sampad – were added to the corporation.
Since then, the corporation has procured a total of 44 ships. However, 36 ships were sold or scrapped at various stages due to the natural ageing of the ships and making them commercially unprofitable. ***
