Govt seeks $250m worth loan guarantee from WB for LNG import

As the Mideast crisis stokes concern about fuel security, Bangladesh's state-run energy corporation Petrobangla has requested an additional US$250-million loan guarantee from the World Bank to augment liquefied natural gas (LNG) imports, officials say.

The fresh fund request would add up to an existing $350-million guarantee facility approved last year.

The total fund support from World Bank's concessional lending arm, IDA, would come to $600 million for the country's energy-security programme, Energy and Mineral Resources Division (EMRD) officials said Friday.

Bangladesh government's move is part of a strategic shift to stabilise energy supply as the raging Middle-East conflict might affect the energy security following the depleting domestic gas reserves, they said.

"The Petrobangla had recently sent us a request for the additional $250 million worth of loan guarantee from the IDA. Accordingly, we have requested the WB to mobilise the guarantee for the Petrobangla," said a senior Economic Relations Division (ERD) official.

Earlier on December 23 last year, the government of Bangladesh signed deal with the WB for getting the IDA's $350-million-loan guarantee for purchasing LNG from the global spot market.

The initial $350 million guarantee, approved under the Energy Sector Security Enhancement Project (ESSEP) in June 2025, was designed to mobilise roughly $2.1 billion in private commercial financing over seven years. The Petrobangla will use the IDA guarantee to mobilise up to $2.1 billion in private capital over the next seven years to support LNG import.

Meanwhile, the state-run Bangladesh Oil, Gas and Mineral Corporation or Petrobangla also inked deals with eight local and foreign commercial banks to facilitate the import of LNG, backed by the repayment guarantee from the World Bank, as Bangladesh seeks to secure its future energy supply and ease pressure on foreign-exchange reserves.

Following a competitive tender, Petrobangla selected three foreign banks - Germany's Deutsche Bank, the Development Bank of Singapore, and Standard Chartered - and five local ones - Prime, Eastern, Dutch-Bangla, City, and BRAC - to provide financial support for LNG import starting in 2026.

A senior Petrobangla official says, "The proposed additional $250-million funds will secure larger volumes of LNG through long-term contracts, reducing the nation's reliance on the volatile and expensive spot market."

Analysts estimate this facility saves the state approximately 1.0 per cent in interest costs compared to traditional high-interest liquidity facilities as the IDA guarantee would carry an internationally recognized facility to the LNG exporters.

The timing of the request coincides with the commencement of several new long-term LNG- delivery contracts in early 2026.

Petrobangla officials have said the expanded $250-million guarantee is essential to provide the Standby Letters of Credit (SBLCs) required by global suppliers.

Currently, imported LNG accounts for over 25 per cent of Bangladesh's total gas consumption. With nearly 42 per cent of that gas fueling the power sector, any disruption in supply poses a severe risk of nationwide load-shedding and industrial stagnation.

The financing is structured as a revolving facility, meaning as Petrobangla settles its dues, the credit limit resets, allowing for continuous procurement cycle after cycle.

The Petrobangla official says: "This guarantee is a critical pillar for our energy security.

"It provides the liquidity and international trust needed to keep our industries running while we transition to a more sustainable energy mix."

If the additional loan guarantee is approved, it will further insulate the Bangladeshi economy from global energy-price shocks throughout 2026 and beyond. Bangladesh is one of LNG importers from Middle-Eastern nations, including Qatar, and the import process has already been affected for the Iran-USA-Israel conflicts.