World Bank approves $350m additional financing for Bangladesh energy project

The World Bank on Monday confirmed an additional US$350 million financing for the Energy Sector Security Enhancement Project in Bangladesh

Bangladesh relies on imported liquified 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 reserves and public finances. A prolonged conflict in the Middle East would materially impact fuel and fertilizer supply and the poorest households would be hardest hit, the World Bank said in a press release.

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 state-owned oil and gas ompany.

The financing package will also 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 and 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 disruption.

The original $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 scheduled to end on December 31, 2031.

kabirhumayan10@googlemail.com