DHAKA: Bangladesh is to get $1.2 billion in loans this year from the Islamic Development Bank to help finance its oil imports, at cheaper rates than last year when it borrowed more.

The IDB will provide the loan at 4.50 percent, lower than 4.65 percent last year, a senior official of Bangladesh Petroleum Corp. said.

Bangladesh’s oil imports are likely to rise to 5.7 million tons in 2014 from nearly 5.5 million last year, according to the energy ministry. Last year, the IDB lend $2.2 billion to Bangladesh for oil imports.

BPC, the country’s sole oil importer and distributor, has finalized first-half term contracts for refined oil products at mostly unchanged current premiums.

Suppliers for Bangladesh’s middle distillates contracts are Kuwait Petroleum Corp, Malaysia’s Petronas, Emirates National Oil Co, Philippines National Oil Co, Vietnam’s Petrolimex, Indonesia’s Bumi Siak Pusako, Maldives National Oil Co. and Unipec.

BPC is also buying 700,000 tons Murban crude from Abu Dhabi National Oil Co. and another 600,000 tons of Arab Light crude from Saudi Aramco in 2014 for its sole refinery, up more than 8 percent from a year earlier.

Bangladesh’s fuel demand is growing sharply as a shortfall in natural gas forces it to turn to oil-fired power plants to resolve electricity shortages.

The government heavily subsidizes BPC, which sells fuel oil to the local market at rates much lower than import prices.