The European Union’s groundbreaking decision to ban nearly all oil from Russia to punish the country for its invasion of Ukraine is a blow to Moscow’s economy, but its effects may be blunted by rising energy prices and other countries willing to buy some of the petroleum, industry experts say.

European Union leaders agreed late Monday to cut Russian oil imports by about 90% over the next six months, a dramatic move that was considered unthinkable just months ago.

The 27-country bloc relies on Russia for 25% of its oil and 40% of its natural gas, and European countries that are even more heavily dependent on Russia had been especially reluctant to act.

European heads of state hailed the decision as a watershed, but analysts were more circumspect.

The EU ban applies to all Russian oil delivered by sea. At Hungary’s insistence, it contains a temporary exemption for oil delivered by the Russian Druzhba pipeline to certain landlocked countries in Central Europe.

In addition to retaining some European markets, Russia could sell some of the oil previously bound to Europe to China, India and other customers in Asia, even though it will have to offer discounts, said Chris Weafer, CEO at consulting firm Macro-Advisory.

“Now, for the moment, that’s not financially too painful for Russia because global prices are elevated. They’re much higher than last year,” he said. “So even Russia offering a discount means that it’s probably selling its oil for roughly what it sold for last year also.”

He noted that “India has been a willing buyer” and “China’s certainly been keen to buy more oil because they’re both countries who are getting big discounts on global market prices.”

Still, Moscow has traditionally viewed Europe as its main energy market, making Monday’s decision the most significant effort yet to punish Russia for its war in Ukraine.

“The sanctions have one clear aim: to prompt Russia to end this war and withdraw its troops and to agree with Ukraine on a sensible and fair peace,” German Chancellor Olaf Scholz said.

Ukraine estimated the ban could cost Russia tens of billions of dollars.

“The oil embargo will speed up the countdown to the collapse of the Russian economy and war machine,” Foreign Minister Dmytro Kuleba said.

Ukrainian President Volodymyr Zelenskyy said in a video address that Ukraine will be pressing for more sanctions, adding that “there should be no significant economic ties left between the free world and the terrorist state.”

Simone Tagliapietra, an energy expert and research fellow at the Brussels-based think tank Bruegel, called the embargo “a major blow.”

Matteo Villa, an analyst at the ISPI think tank in Milan, said Russia will take a pretty significant hit now but cautioned that the move could eventually backfire.

“The risk is that the price of oil in general goes up because of the European sanctions. And if the price goes up a lot, the risk is that Russia starts to earn more, and Europe loses the bet,” he said.

Like previous rounds of sanctions, the oil ban is unlikely to persuade the Kremlin to end the war.

Moscow seized on the new sanctions to try to rally public support against the West, describing it as bent on destroying Russia.

Dmitry Medvedev, the deputy head of Russia’s Security Council who served as the country’s president, said the oil ban aims to reduce the country’s export earnings and force the government to scale down social benefits.

“They hate us all!” Medvedev said on his messaging app channel. “Those decisions stem from hatred against Russia and against all of its people.”

Russia has not shied away from withholding energy to get its way. Russian state energy giant Gazprom said it is cutting off natural gas to Dutch trader GasTerra and Denmark’s Oersted company and is also stopping shipments to Shell Energy Europe that were bound for Germany. Germany has other suppliers, and GasTerra and Oersted said they were prepared for a shutoff.

Gazprom previously stopped the flow to Bulgaria, Poland and Finland.

Meanwhile, the EU is urging other countries to avoid placing trade barriers on farm products as Russia’s war increases the risks of a global food crisis.

Zelenskyy has said Russia has prevented the export of 22 million tons of Ukrainian grain, much of it meant for people across the Middle East and Africa. He accused Moscow of “deliberately creating this problem.”

Russian oil delivered by sea accounts for two-thirds of the EU’s oil imports from Moscow. In addition to the EU cutoff of such imports, Germany and Poland have agreed to stop using oil from the northern branch of the Druzhba pipeline.

Agreeing on sanctions against Russian natural gas is likely to prove much tougher because it represents a larger percentage of Europe’s energy mix.

“The very loud and clear message that Moscow will hear is that it will be near impossible for the European Union to get any agreement on blocking gas because gas will not be as easily replicated from other sources in Europe as oil will be,” Weafer said.

- UNB

As the Ekushey Boi Mela (Book Fair) 2024 crossed its seventh day yesterday, publishers and book sellers are hopeful for increased sales and public engagement, despite not yet reaching their anticipated sales targets.

The Dhaka Metro Rail has infused the fair with a new vibrancy, making it more accessible for visitors from distant areas like Uttara, Mirpur, and Motijheel. Ovi Islam, from Farmgate, shared his positive experience of using the metro rail to bypass traffic jams, despite the initial long wait for tickets.

Although some visitors, like Ovi who visited the fair three times without purchasing books, contribute to the growing foot traffic, the overall sales have yet to see a significant boost.

Another group of visitors from Uttara noted the ease of accessing the fair this year, thanks to the metro rail, which has offered a way to avoid the infamous Dhaka traffic congestion.

Book sellers expressed mixed feelings about the fair's progress. While visitor numbers are on the rise, actual book purchases remain lower than expected. Nur Hossen Sarkar from Anupam Prokashoni observed that many attendees are more interested in browsing than buying. Similarly, Mohammad Jabed from Mowla Brothers noted a slight decrease in sales compared to the initial days but remains hopeful for an uptick in activity.

Some exhibitors have faced challenges with their stall placements, leading to visibility and accessibility issues. Sumon Saj from Nongor Publication voiced concerns about being allocated a less favorable location and has reported the issue to Bangla Academy without seeing significant action.

Some publishers also expressed dissatisfaction about the overall arrangement and environment. These issues suggest that while the metro rail has made the fair more accessible, improvements are still needed in its organization and visitor experience.

With the fair still underway, publishers and sellers are optimistic about a surge in sales and visitor numbers, especially with the upcoming weekend.

-UNB

Private sector’s Shahjalal Islami Bank is in trouble with realisation of the loan from Dhaly Construction and grant of new loan of Tk 408 crore to the company. The loan was disbursed without adequate collateral and verifying the financial status of the customer.

According to the report of Bangladesh Bank, the then managing director and board of directors, along with the officers of the relevant departments of the bank's branch and head office, cannot avoid the responsibility of this irregularity, said a report of the Bangladesh Bank.

It is known that Dhaly Construction took a loan of Tk 129 crore in 2013 from Trust Bank's Dilkusha branch in the capital. At the end of 2015, the loan amount increased to Tk 156 crores.

In November 2015, Dhaly Construction applied to Shahjalal Islami Bank to acquire the Trust Bank loan. Dhanmondi branch of Shahjalal Islami Bank acquired Dhaly Construction Limited's loan of Tk 118 crore from Trust Bank in December of that year.

In December, Shahjalal Islami Bank disbursed an additional Tk 188 crore funded and Tk 70 crore unfunded loan to Dhaly Construction Limited. In August 2017, Shahjalal Islami Bank gave another loan of Tk 115 crore. Of this, 85 crores are funded and 30 crores are non-funded. But Shahjalal Islami Bank could not tell Bangladesh Bank how much money has been loaned and against which assets.

According to the report, Shahjalal Islami Bank gave the loan forcefully to Dhaly Construction due to the failure of various companies to pay their debts. As a result, at the end of April this year, the amount of loan disbursed by Shahjalal Islami Bank to Dhaly Construction stood at Tk 408 crore. Out of this, 350 crore are funded and 58 crore non-funded.

Shahjalal Islami Bank was unable to collect the money despite repeated efforts. Dhaly Construction has mortgaged 721 acres of land and a building measuring 37,000 square feet as security against the loan.

In this regard, a deputy managing director of Shahjalal Islami Bank, on condition of anonymity, told the media that “Dhaly Construction is in a good position among the country's construction companies. We have business relationship with them since 2015. The company is facing big challenges due to the epidemic. Although we are hopeful of recovering the loan, it will take more time to get the money back.”

Regarding cashing the bill of Dhaly Construction through another bank instead of Shahjalal Bank, the Deputy Managing Director said that Dhaly Construction did this due to the need for cash. They thought that if they deposit the bill in the bank, the money will be deducted to pay off the loan.

However, when asked about the violation of the bank's board of directors policy in disbursing loans, he refused to make any comment.

Dhaly Construction chairman Rafique Uddin told the media that “Our company has implemented large road and construction projects including several university buildings in the country. We have been facing challenge since Covid pandemic as some our projects had to be stopped. Moreover, the abnormally high prices of construction materials also increased the project cost."

When asked about repayment of loan from Shahjalal Islami Bank, he said that new projects will be taken up and the loan will be repaid. The business relationship with the bank will also continue.

Dhaly Construction Advisor MM Mizanur Rahman told the media that there were some errors in the documents. It will be resolved quickly. He said, the bank can collect the debt by selling the company's assets. Apart from this, the company is involved in several construction projects. If the work of these projects is completed, the loan can be paid.

According to the central bank report, it was directed by the Board to take security equal to the investment while disbursing the loan. But, only Tk 90 crore of collateral (land and building) was taken against the funded loan of Tk 188 crore. The board was not informed of the investment with less security.

According to the report, Shahjalal Bank could not provide any information to the central bank's inspection team about the amount of money invested against specific work orders and the number of bills received in respect of those work orders.

The report said that the board of the directors of the bank advised taking a legal opinion before approving funded loans of Tk 188 crore and non-funded loans of Tk 70 crore and mortgaging 721 khata land. But the bank did not take into consideration the legal opinion while giving the loan. As no collateral is taken for new loans, the bank's investment becomes risky.

Country's both the bourses, Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) today plunged further due to mainly price fall in large-cap securities.

DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), slid 65 points, or 1.01 per cent, at 6,413 at the end of the day. The DS30, the index that consists of blue-chip companies, went down 0.93 per cent to 2,277, while the DSES, the Shariah-complaint index, plummeted 0.80 per cent to 1,406.

Turnover at the DSE dropped 3 per cent to Taka 1,297 crore which was Taka 1,343 crore on the previous day.

At the DSE, 26 stocks advanced, 153 declined and 182 did not show any price movement.

Bangladesh Monospool Paper Manufacturing topped the gainers' with an 8.64 per cent rise. Fine Foods, Rahima Food Corporation, Eastern Cables, and Eastern Lubricants also advanced over 5 per cent.

Apex Foods suffered the highest correction, sliding almost 13 per cent. Far East Knitting, BDCOM Online, Navana CNG, and Apex Spinning declined more than 9 per cent.

The CASPI, the all-share price index of the Chattogram Stock Exchange, decreased 164 points, or 0.86 per cent to end at 18,895.

Of the issues on the port city bourse, 34 advanced, 104 declined, and 80 remained unchanged.

- BSS

The Executive Committee of the National Economic Council (ECNEC) today approved six projects with Tk 7,018 crore.

The meeting was held under the chairmanship of ECNEC Chairperson and Prime Minister Sheikh Hasina on Tuesday (October 11).

The premier joined the meeting virtually from her official Ganabhaban residence here while ministers, state ministers, planning commission members and secretaries concerned were connected to it from the NEC Conference Room in the city's Sher-e-Bangla Nagar area.

After the meeting, Planning Minister MA Mannan gave details in the press conference.

thousand 362 crore 63 lakh will come from the government funding, Tk 2 thousand 386 crore 48 lakh from foreign funding and Tk 269 crore 62 lakh from the organization's own funding. 

The remittance inflow sinks to lowest in seven months. The inflow of remittance dropped around 25% in September to $1.54 billion compared to August earnings. 

Bangladesh received $2.04 billion in remittances in August, according to central bank data published Sunday (2 October).

The total remittance inflow in the current financial year is $5.67 billion, which was $5.41 billion during the same period last year.

According to experts, the cost of living for expatriates increased due to global inflation. Additionally, they are preferring hundi over legal remittance channels as they are getting Tk5-6 per dollar more than the bank exchange rate.

They had expressed concern that the Hundi channel may become more active. 

Remittances dropped to a seven-month low in September as the central bank fixed the dollar exchange rate for inward remittance. Bangladesh received a lower remittance of $1.49 billion last February.

Bankers said the downfall happened after, on the advice of the central bank on 12 September, the banks fixed the dollar exchange rate for remittances at Tk108.

However, bankers had initially feared that remittances may decrease due to fixing the exchange rate. The exchange houses said that the remittances came in less in the first week after the rate was fixed as remitters could not be given higher rates. 

A visit to the website of several exchange houses including Moneygram and Western Union shows that they are paying Tk106-107 per dollar for remittance inflow. However, the houses also charge $1-2 as transfer fee. 

As a result, those who send remittances in small amounts do not get an average rate of more than Tk104-105 a dollar. 

At present remittance through Hundi yields Tk113-114 per dollar. Due to fixed exchange rate at banks, the difference between dollar price of Hundi and the banking channel is at least Tk6-7.