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Country's liquefied natural gas (LNG) import financing is set to get an impetus from next month (November) with the availability of fiscal support from World Bank (WB).
The WB's US$350-million support under its Energy Sector Security Enhancement Project (ESSEP), aimed at improving Bangladesh's gas supply security facilitating affordable financing for LNG imports, is expected to get rolling from next month, Petrobangla's director for finance AKM Mizanur Rahman told The Financial Express Monday.
"We are now carrying out paper works with the selected banks to facilitate LNG imports, secured by a repayment guarantee from the WB," said the senior official of state-run Petrobangla.
The step aims to safeguard Bangladesh's future energy supplies and ease pressure on foreign exchange reserves, he mentioned.
The World Bank board approved the project in late June, which will leverage an International Development Association (IDA) guarantee to mobilise up to $2.1 billion in private capital over the next seven years to support LNG imports.
The IDA, the World Bank's soft-lending arm, will guarantee Petrobangla's repayment obligations to the banks for loans and SBLC draws, covering up to $350 million in principal and accrued interest. The guarantee excludes penalties, default interest, or similar charges.
This is the first time the World Bank has provided assistance to Bangladesh through a guarantee facility specifically for LNG imports. beyond its usual development project loans and budget support, it was learnt.
The IDA guarantee is expected to enhance Petrobangla's credit profile, enabling it to secure LNG supplies more effectively amid growing foreign currency constraints, according to officials.
The government has also extended a sovereign and indemnity guarantee to the WB to support Petrobangla's costly LNG imports, ensuring payment if the state-run company fails to repay its loans on time.
A senior official at the Finance Division under the Ministry of Finance (MoF) said that the MoF provided the counter-guarantee or indemnity to the multilateral donor agency to reimburse funds, if needed.
The World Bank's repayment guarantee is thus backed firmly by the Ministry of Finance's sovereign guarantee.
According to officials, Petrobangla has already selected eight local and foreign commercial banks to facilitate LNG imports, secured by a repayment guarantee from the World Bank.
Following a competitive tender, Petrobangla shortlisted three foreign banks -- Germany's Deutsche Bank, the Development Bank of Singapore, and Standard Chartered -- along with five local banks -- Prime Bank, Eastern Bank, Dutch-Bangla Bank, City Bank, and BRAC Bank -- to provide financial support for LNG imports, starting in 2026.
The aforesaid banks were selected from 31 banks and 11 consortiums that submitted bids.
The selected banks will form a consortium to provide Petrobangla with a standby letter of credit (SBLC) worth $200 million-- valid for up to 12 months-- in favour of long-term LNG suppliers under existing sales and purchase agreements (SPAs).
They will also offer an additional SBLC of $50 million, valid up to 90 days, for spot LNG suppliers under master sales and purchase agreements (MSPAs).
Moreover, the consortium will provide a $100- million credit line as short-term loans with up to a 12-month tenor to help Petrobangla meet payment obligations for specific LNG cargoes under the SPAs and MSPAs.
The World Bank noted that LNG now accounts for over a quarter of Bangladesh's total gas consumption, costing around $4.5 billion annually.
Some 42 per cent of the country's gas is consumed by the power sector, making LNG supply disruptions a significant risk to electricity generation.
Bangladesh's increasing reliance on imported fuels continues to strain the economy, especially due to difficulties in securing foreign currency for essential imports.
Since LNG imports began in 2018, Bangladesh has imported about 31.24 million tonnes of LNG as of June 2025, according to data from Rupantarita Prakritik Gas Company Ltd.
With domestic gas reserves rapidly depleting, Bangladesh is expected to need 30 million tonnes of LNG annually by 2041 to meet growing demand.
Azizjst@yahoo.com