BSC to purchase six vessels for $330m

The Bangladesh Shipping Corporation (BSC) has received primary approval from the Planning Commission (PC) for its $330.32 million project to acquire six container vessels from South Korea.

Each ship will have a capacity of 2,500 to 3,000 twenty-foot equivalent units (TEUs), the corporation said in a stock exchange filing on Sunday.

BSC said a concept paper for the project had been signed with Korea's Economic Development Cooperation Fund (EDCF), which is currently conducting a feasibility study.

The final execution of the project depends on EDCF's approval, according to the disclosure.

The news sparked a positive response in the markets, with BSC's stock price climbing 1.85 per cent to Tk 87.90 on the Dhaka Stock Exchange on Sunday.

As part of the broader initiative, the state-run company is also pursuing an additional project to acquire six more vessels, each with capacities between 2,800 and 3,000 TEUs. This move is expected to bring a revolutionary change to the country's maritime trade sector, the disclosure added.

Currently, BSC operates oil and bulk cargo vessels but does not have any container ships in its fleet. The acquisition of these six container vessels will mark a significant development for the state-run company in maritime cargo transport.

The major portion of the project will be funded through foreign loans from South Korea's EXIM Bank, with the remainder to be covered by the Bangladesh government, said an official of the company, who declined to be named.

The purchase of these ships is part of the government's plan to make the BSC a self-dependent shipping entity, he said, adding that if everything goes as planned, these vessels are expected to join BSC's fleet within next three years.

The expansion comes as BSC seeks to broaden Bangladesh's maritime trade footprint and strengthen its role in international shipping markets,

The Bangladesh Shipping Corporation started its journey with only two ships in 1972 and got listed on the stock market in 1977. It owned only two ships until 2018 before the inclusion of six vessels to its fleet. Three ships were added in 2018, and the rest in 2019.

One of its vessels -- Banglar Samriddhi -- came under attack in the Russia-Ukraine war in 2022. The BSC received an insurance claim worth $22.48 million in March 2023.

Meanwhile, two older lighter ships, Banglar Jyoti and Banglar Shourabh got damaged in a fire in September and October respectively last year. The BSC decided to sell these fire-damaged oil tankers worth Tk 505.6 million.

As of now, BSC's fleet consists of just five ships.

In February 2023, the Shipping Ministry issued a Bangladesh Flag Vessel (protection of interests) rule, incorporating a provision that the Shipping Corporation will handle waterway shipment of all state imports of fertiliser, crude oil, food items, and motor vehicles.

The Bangladesh Flag Vessels (Protection) (Amendment) Act mandates that government entities, such as the Bangladesh Petroleum Corporation and the Bangladesh Chemical Industries Corporation, prioritise BSC for their import needs.

The state-owned autonomous corporation's sea-going vessels carry export items, such as garments, and imported products, such as grain and crude oil.

FINANCIAL PERFORMANCE

The shipping corporation's half-yearly (July-December 2024) profit jumped 44 per cent year-on-year to Tk 1.44 billion while gross operating revenue rose 31 per cent to Tk 2.97 billion.

The corporation also maintained a steady annual profit growth over the past few years, with a record profit of nearly Tk 2.50 billion in FY24.

Based on the profit, it declared a 25 per cent cash dividend for FY24. It also provided a 25 per cent cash dividend in FY23.

The Corporation has been experiencing strong growth in profit and revenue, driven by higher freight charges in the international routes following the Covid-19 pandemic and the Russia-Ukraine war, as well as the rising value of the dollar.