Bangladesh is moving closer to securing an additional US$350 million guarantee from the World Bank to support LNG imports, as falling domestic gas production increases the country’s dependence on overseas energy supplies.
The additional guarantee from the International Development Association (IDA) is expected to be finalised in October 2026, according to officials. It would bring the World Bank’s total guarantee commitment for Bangladesh’s LNG imports to US$700 million.
The new financing support is expected to help state-owned Petrobangla arrange commercial funding for LNG purchases in 2027. With the backing of the IDA guarantee, Petrobangla could raise as much as US$2.1 billion in private commercial financing over a seven-year period.
Petrobangla Director AKM Mizanur Rahman said the completion of the loan and related agreements in October would pave the way for the government to issue standby letters of credit (SBLCs) from November 2026 to secure LNG imports.
Petrobangla plans to issue SBLCs in favour of LNG suppliers under its long-term contracts by November 30, 2026.
The financing mechanism will involve eight selected commercial banks. The group includes international lenders such as Deutsche Bank and Standard Chartered, along with five local banks that were selected through a competitive tender process.
The World Bank guarantee is expected to strengthen Petrobangla’s credit position in international markets and allow it to obtain financing on more favourable terms. Officials said the arrangement would also reduce the need for substantial cash margins and help lower borrowing costs.
Negotiations over the additional guarantee have been underway for several years. After the negotiations are completed, Petrobangla will sign a project agreement with the IDA and a facility agreement with participating lenders in Singapore. The Finance Division of the Ministry of Finance will also sign an indemnity agreement with the IDA.
The original US$350 million guarantee was approved by the World Bank Board on June 18, 2025, under the Energy Sector Security Enhancement Project (ESSEP). The project became effective in early 2026 and is scheduled to continue until December 31, 2031.
Bangladesh is facing growing pressure on its energy sector as domestic gas reserves continue to decline. The country has consequently increased its reliance on imported LNG, exposing its energy supply system to fluctuations in international prices and geopolitical disruptions.
An Economic Relations Division official said the IDA guarantee would give Bangladesh greater scope to procure LNG from international markets at competitive prices.
The additional financing is particularly significant amid heightened global energy-market uncertainty and the risk of disruptions to fuel supplies caused by geopolitical conflicts.
Petrobangla estimates that Bangladesh’s LNG requirement could reach around 30 million tonnes annually by 2041 as demand for natural gas continues to rise and domestic production falls.
