WB approves $350m addl financing supporting LNG imports in BD
The World Bank has approved $350 million in financing to strengthen Bangladesh’s energy security by supporting cost-effective mechanisms for importing liquefied natural gas (LNG), as global fuel markets face volatility.
The financing was approved on May 15 under the Energy Sector Security Enhancement Project, according to a press release.
It said Bangladesh relies on imported liquefied natural gas (LNG) to meet electricity demand, particularly for power generation and industrial production.
Disruptions in global energy markets due to the conflict in the Middle East have heightened price volatility and supply risks, placing pressure on foreign exchange reserve and public finance.
A prolonged conflict in the Middle East would materially impact fuel and fertilizer supply and the poorest households would be hardest hit.
The release said the additional financing will help strengthen Bangladesh’s energy security by facilitating cost-effective financing mechanisms to import LNG amid global fuel market volatility. It will scale up support to cover payments for LNG imports by Petrobangla.
The additional financing will help Petrobangla secure LNG supplies under longer-term contracts, reduce reliance on expensive spot market purchases, and support a more reliable and affordable electricity supply.
Reliable and affordable energy generation will generate jobs, boost private sector growth and economy wide benefits.
The additional financing consists of an IDA payment guarantee-backed financing facility that will support payment security for LNG imports through standby letters of credit and short-term credit lines.
These instruments are expected to help Bangladesh shift toward more predictable, longer-term LNG procurement arrangements while maintaining flexibility to respond to market disruptions.
The original $350 million Energy Security Enhancement Project for Bangladesh was approved by the World Bank’s Board of Executive Directors on Monday, and is scheduled to end on December 31, 2031.
Jean Pesme, World Bank Division director for Bangladesh and Bhutan, noted that the conflict in the Middle East has driven up LNG prices and caused supply disruptions.
As Bangladesh depends heavily on imported fuel and gas, he said the country is facing considerable fiscal strain in maintaining energy security and sustaining economic activity.
He added that, as part of ongoing engagement with the authorities on energy and the broader impact of the war, the World Bank is increasing its support to help ensure a steady flow of LNG imports.
This, he said, is essential to avoid costly energy shortages and to safeguard the economy and livelihoods. Reliable gas supplies, he emphasised, will help sustain electricity generation, industrial production and employment.
Olayinka Edebiri, World Bank senior energy expert and task team leader of the project, said that gas, being relatively cheaper and less carbon-intensive than other fuels, makes a consistent LNG supply a key pillar of Bangladesh’s energy security.
He further noted that it can also generate fiscal benefits by reducing reliance on more expensive liquid fuel imports.
