The Jeddah-based Islamic Development Bank (IDB) has agreed to lower interest rate for loans for oil import by the state-run Bangladesh Petroleum Corporation (BPC), a senior official said on Monday.

 "At last they have accepted our proposal not to raise interest rate on loans," said Anwarul Karim, chairman of BPC.

Government's energy division earlier send a letter to the IDB requesting not to raise interest rate on its $400 million loan in the pipeline for the BPC.

IDB recently fixed the rate of interest at 5.5 percent on its yearly loans borrowed by the BPC, the lone importer and distributor of oil.

"So far BPC borrowed money from the IDB following formula based nterest rate - LIBOR (London Interbank Offered Rate) plus interest rate between 1.5 and 1.75 percent," Anwarul told Reuters.

IDB set the fixed rate as the LIBOR has registered a fall.

Bangladesh also requested to raise its annual loan by 50 percent to 1$.5 billion from $1 billion as fuel import bills for the current fiscal year to next June will rise substantially.

In the current fiscal year of 2007-08 (July-June) Bangladesh will require $4.5 billion for buying oil and repay earlier loans and bills, while BPC spent $3.2 billion in the previous fiscal year, he said.

Bangladesh imports 3.8 million tonnes of fuel every year, including about 1.5 million tonnes of crude oil, the official said.($1 = 68.50 taka)

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