WB approves $350m support for Bangladesh LNG imports

The World Bank has approved an additional $350 million financing package for Bangladesh to help maintain LNG imports and strengthen the country’s energy security amid growing instability in global energy markets.

The funding, approved on 15 May under the Energy Sector Security Enhancement Project, comes as Bangladesh faces mounting pressure from rising fuel prices and supply disruptions linked to the ongoing conflict in the Middle East, according to a World Bank statement issued on Monday.

Bangladesh currently relies heavily on imported liquefied natural gas (LNG) to support electricity generation and industrial activities. The World Bank warned that continued geopolitical tensions in the Middle East could further disrupt global fuel and fertiliser supplies, increasing pressure on the country’s foreign exchange reserves and public finances.

The lender said poorer households would likely be hit hardest if the conflict continues and energy prices keep rising.

Under the new financing arrangement, support will be provided to improve LNG procurement mechanisms and strengthen payment facilities for state-owned Petrobangla.

The World Bank said the package would help Bangladesh secure LNG through longer-term supply contracts, reduce reliance on costly spot market purchases and ensure more reliable and affordable energy supplies.

Officials said stable gas imports are essential for sustaining electricity generation, industrial operations, employment and overall economic activity.

The financing package includes an International Development Association (IDA) payment guarantee-backed facility aimed at supporting LNG import payments through standby letters of credit and short-term financing arrangements.

According to the World Bank, these mechanisms are expected to help Bangladesh adopt more predictable LNG procurement strategies while retaining flexibility to respond to market disruptions.

The original $350 million Energy Security Enhancement Project was approved in June 2025 and is scheduled to continue until December 2031.

Jean Pesme, World Bank division director for Bangladesh and Bhutan, said the ongoing Middle East conflict has significantly increased LNG prices and disrupted global energy supply chains.

As Bangladesh remains heavily dependent on imported fuel and gas, he said the country is facing growing fiscal challenges in maintaining energy security and supporting economic activities.

He added that the World Bank is expanding its assistance to help ensure uninterrupted LNG imports and reduce the risk of costly energy shortages.

“Reliable gas supplies are critical for sustaining electricity generation, industrial production and jobs,” he said.

Olayinka Edebiri, senior energy specialist at the World Bank and task team leader for the project, said natural gas remains comparatively cheaper and less carbon-intensive than many alternative fuels.

She added that ensuring stable LNG imports could also help reduce Bangladesh’s dependence on costly liquid fuel imports and bring broader fiscal benefits to the economy.