World Bank seeks faster government approvals for project effectiveness

The World Bank (WB) has sought the government's cooperation for faster approvals to make a $350-million financing facility effective and operationalised.

The facility aims to enhance Bangladesh's energy-sector security.

The World Bank Board of Directors in June this year approved the "Energy Sector Security Enhancement Project", which would provide a payment guarantee-backed financing facility to support Petrobangla's liquefied natural gas (LNG) imports under new long-term agreements, starting in 2026.

In a letter to Finance Adviser Dr Salehuddin Ahmed last week, seen by The Financial Express, the World Bank division director for Bangladesh and Bhutan, Jean Pesme, wrote that the financing facility would be offered by international commercial banks, which would be competitively selected by Petrobangla.

The financing arrangement would have a tenor of seven years, he wrote.

He also wrote that Petrobangla was actively working on making the facility effective by mid-December 2025.

"This deadline is essential to meet the required timeline for the issuance of standby letters of credit required by its LNG suppliers to start the deliveries of cargoes in 2026," he mentioned.

Petrobangla and the relevant stakeholders are now working on finalising the key legal documents like project agreement, facility agreement, indemnity agreement, and guarantee agreement.

Mr Pesme also wrote that in the coming weeks, Petrobangla would be seeking the necessary government approvals for the documents from the Economic Relations Division and the Ministry of Law, Justice and Parliamentary Affairs.

"The timely processing of these approvals is critical to meet the deadline of Dec 15, 2025," he wrote.

He sought the finance adviser's support and timely intervention to obtain expeditiously the relevant government approvals for the legal documents to make the project operational and effective.

According to a previous release of the World Bank, the energy security enhancement project would utilise an International Development Association (IDA) guarantee to mobilise up to $2.1 billion in private capital over seven years for new LNG imports.

The backing of an IDA guarantee will improve Petrobangla's creditworthiness to secure LNG supplies.

Imported LNG accounts for over one-fourth of the total gas consumption in Bangladesh.

About 42 per cent of the total gas consumption is in the power sector.

Therefore, gas supply shortages disrupt electricity generation, negatively impacting the economy.

"This project will provide payment security and working capital solutions to facilitate LNG imports under long-term contracts and thereby reduce dependency on the expensive spot market gas imports," the World Bank release said.

"The project will help Bangladesh enhance gas supply security in a cost-efficient manner, contributing to reliable and affordable electricity for industries and domestic users," said Olayinka Bisiriyu Edebiri, World Bank senior energy specialist and task team leader for the programme.

"By ensuring reliable gas supply, the project will help boost economic growth and resilience," she said.

syful-islam@outlook.com