Govt signs $1b loan deal with IsDB for Eastern Refinery expansion to cut refined fuel import costs

The government today (3 September) signed a $1 billion loan agreement with the Islamic Development Bank (IsDB) for the modernisation and expansion of the Eastern Refinery Project.

The agreement was signed at the Secretariat in the presence of Prime Minister Tarique Rahman and IsDB Group President Muhammad Al Jasser, said PM's Deputy Press Secretary Hasan Shiplu.

The financing will support the construction of the second unit of Eastern Refinery Limited, Bangladesh's only state-owned crude oil refinery, in Chattogram.

Speaking at the signing ceremony, Prime Minister Tarique Rahman called the deal a "statement of confidence" in Bangladesh, reports UNB.

Under the project, Eastern Refinery will gain additional capacity to refine 30 lakh tonnes of crude oil annually. Once implemented, the project is expected to enable the country to meet around 45%-50% of its demand for petroleum products.

The project is planned to be completed by November 2030. Once completed, the second unit is expected to significantly increase Bangladesh's domestic refining capacity and reduce the foreign currency spent on importing refined fuels.

Additional Secretary of the Economic Relations Division (ERD) Md Mizanur Rahman signed the agreement on behalf of Bangladesh, while IsDB Director General (Country Programmes) Anasse Aissami signed it on behalf of the IsDB Group.

The IsDB president arrived in Dhaka on Wednesday to lead a high-level delegation and take part in official development programmes. The IsDB Board of Executive Directors approved the $1 billion financing for the Eastern Refinery project at its 367th meeting in June.

'Statement of confidence'

PM Tarique said the project was not just an energy investment but an investment in the country's energy security, economic resilience and long-term growth.

"I hope this project becomes a landmark in Bangladesh-IsDB cooperation and demonstrates what trusted, results-driven partnerships can achieve," he said.

Tarique said geopolitical tensions, conflicts, supply-chain disruptions, energy and food insecurity, climate change, technological transformation, and rising development financing costs were putting additional pressure on developing economies.

"No country can face these alone. Partnerships matter more than ever," he said.

He praised IsDB President Muhammad Sulaiman Al Jasser's leadership in establishing the Islamic Concessional Fund (ICF), a low-cost financing for developing-country members.

He said Bangladesh is committed to benefiting from the ICF, while the Economic Relations Division was working with the IsDB Regional Hub in Dhaka to identify potential projects.

Bangladesh to become manufacturing hub, regional gateway: PM

He said the government's mission is to transform Bangladesh into a manufacturing hub and a gateway to the region, with electronics, pharmaceuticals, light engineering and green industries driving the country's next phase of economic growth, reports UNB.

"Garments built our first growth story. Now we want electronics, pharmaceuticals, light engineering, and the green industry to build the next one. We want factories that create jobs and dignity," Tarique said.

Tarique said Bangladesh has a new government and a new direction, with a target of building a trillion-dollar economy by 2034. 

"This is not a slogan. It is a plan. We intend to double the size of our economy this decade through exports, investment, and financial discipline," Tarique said