World Bank approves $350m additional financing to support Bangladesh LNG imports

The World Bank has approved $350 million in additional financing for Bangladesh to help strengthen the country's energy security and support liquefied natural gas (LNG) imports amid growing volatility in global fuel markets.

The additional financing for the Energy Sector Security Enhancement Project was approved on 15 May, according to a World Bank press release issued today (18 May).

Bangladesh relies heavily on imported LNG to meet electricity demand, particularly for power generation and industrial production. 

The World Bank said disruptions in global energy markets caused by the ongoing conflict in the Middle East have increased price volatility and supply risks, putting pressure on the country's foreign exchange reserves and public finances.

It warned that a prolonged conflict in the region could significantly affect fuel and fertiliser supplies, with poorer households likely to face the greatest impact.

According to the World Bank, the additional financing will support cost-effective mechanisms for LNG imports and expand assistance for payments made by Petrobangla, the state-owned oil and gas company.

The financing is expected to help Petrobangla secure LNG supplies through longer-term contracts, reduce reliance on expensive spot market purchases and ensure a more reliable and affordable electricity supply.

The World Bank said stable and affordable energy generation would support job creation, private sector growth and broader economic activity.

The financing package consists of an International Development Association (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 disruptions," the press release said.

The original $350 million Energy Security Enhancement Project was approved by the World Bank Board on 18 June 2025 and is scheduled to continue until 31 December 2031.

Jean Pesme, World Bank Division director for Bangladesh and Bhutan, noted that the conflict in the Middle East has driven up LNG prices and caused supply disruptions. As Bangladesh depends heavily on imported fuel and gas, he said the country is facing considerable fiscal strain in maintaining energy security and sustaining economic activity. 

He added that, as part of ongoing engagement with the authorities on energy and the broader impact of the war, the World Bank is increasing its support to help ensure a steady flow of LNG imports. 

This, he said, is essential to avoid costly energy shortages and to safeguard the economy and livelihoods. Reliable gas supplies, he emphasised, will help sustain electricity generation, industrial production and employment.

Olayinka Edebiri, World Bank senior energy expert and task team leader of the project, said that gas, being relatively cheaper and less carbon-intensive than other fuels, makes a consistent LNG supply a key pillar of Bangladesh's energy security. 

He further noted that it can also generate fiscal benefits by reducing reliance on more expensive liquid fuel imports.