Dhaka: World Bank has approved $350 million additional finance to help navigate fuel market volatility in Bangladesh.
According to Bangladesh Sangbad Sangstha, this funding is designated for the Energy Sector Security Enhancement Project in Bangladesh, aiming to bolster the country’s energy security amidst global market disruptions.
The World Bank press release highlights Bangladesh’s reliance on imported liquefied natural gas (LNG) to fulfill its electricity demands, crucial for both power generation and industrial production. Recent disruptions in global energy markets, exacerbated by the conflict in the Middle East, have intensified price volatility and heightened supply risks, putting significant pressure on Bangladesh’s foreign exchange reserves and public finance.
The prolonged conflict in the Middle East poses a substantial threat to fuel and fertilizer supplies, potentially impacting the nation’s poorest households the hardest. The additional financing by the World Bank is intended to address these challenges by facilitating cost-effective financing mechanisms for LNG imports and expanding support to cover payments for these imports by Petrobangla.
This financial boost will enable Petrobangla to secure LNG supplies under longer-term contracts, reducing dependence on costly spot market purchases. Consequently, this support is expected to promote a more reliable and affordable electricity supply, which in turn will generate jobs and stimulate private sector growth and broader economic benefits.
The additional financing package consists of an IDA payment guarantee-backed financing facility, designed to provide payment security for LNG imports through standby letters of credit and short-term credit lines. These financial instruments are expected to assist Bangladesh in transitioning toward more stable, longer-term LNG procurement arrangements while retaining the flexibility to adapt to market disruptions.
The initial $350 million Energy Security Enhancement Project for Bangladesh was approved by the World Bank’s Board of Executive Directors on June 18, 2025, and is slated to conclude on December 31, 2031.