World Bank helps Bangladesh with pricey LNG imports

The World Bank, the leading multilateral global lender, has joined hands with Bangladesh to help the South Asian country import expensive LNG from global suppliers.

Bangladesh’s payments against the imports of LNG will be easier from 2026 with the World Bank’s loan guarantee worth $350 million to facilitate its imports, Petrobangla chairman Md Rezanur Rahman told Gas Outlook.

Bangladesh has cleared its overdue LNG payments in May and is now making payments regularly to all LNG suppliers, Rahman said.

In June, the World Bank’s Board of Executive Directors approved the ‘Energy Sector Security Enhancement Project,’ worth $350 million to help Bangladesh import LNG to improve the country’s overall gas supply, he said.

The project aims to improve Bangladesh’s gas supply security by facilitating access to affordable financing for LNG imports.

It will use an International Development Association, or IDA, guarantee to mobilise up to $2.1 billion in private capital over the next seven years to support LNG imports, according to Rahman.

State-run Petrobangla has selected eight local and foreign commercial banks to facilitate the import of LNG, backed by the repayment guarantee from the World Bank, as Bangladesh seeks to secure its future energy supplies and ease pressure on foreign exchange reserves.

Following a competitive tender, Petrobangla has selected three foreign banks — Germany’s Deutsche Bank, the Development Bank of Singapore, and Standard Chartered — and five local banks — Prime Bank PLC, Eastern Bank PLC, Dutch-Bangla Bank, the City Bank, and BRAC Bank — to provide financial support for LNG imports starting in 2026, Petrobangla’s director of finance AKM Mizanur Rahman told Gas Outlook.

The selected banks will form a consortium to provide Petrobangla with a stand-by letter of credit, or SBLC, worth $200 million, valid for up to 12 months, in favour of long-term LNG suppliers under existing sales and purchase agreements, or SPAs, he said.

They will also offer an additional SBLC worth $50 million, valid for up to 90 days, for spot LNG suppliers under master sales and purchase agreements, or MSPAs.

In addition, the banks will provide a $100 million credit line in the form of short-term loans with up to a 12-month tenor to help Petrobangla meet payment obligations for specific LNG cargoes under the SPAs and MSPAs, Rahman said.

The banks involved in the financing are optimistic about their role in supporting Bangladesh’s energy security.

“Prime Bank is ready to assist and facilitate the government’s efforts to secure the country’s energy supply,” said Tanjil Chowdhury, chairman of Prime Bank. “We have a strong balance sheet and are fully capable of meeting Petrobangla’s financing needs. We are proud to partner with the government.”

IDA, the World Bank’s soft-lending arm, will guarantee Petrobangla’s repayment obligations to the banks for loans and SBLC draws, covering up to $350 million in principal and accrued interest.

However, the guarantee will not cover penalties, default interest, or similar charges, Rahman added.

The Bangladeshi government has extended a sovereign and indemnity guarantee to the World Bank to support Petrobangla’s costly LNG imports, ensuring payment if the state-run company fails to repay its loans on time.

A senior official from the Finance Division under the Ministry of Finance, or MoF, told Gas Outlook that the MoF provided the counter-guarantee or indemnity to the multilateral donor agency to reimburse funds, if needed.

The World Bank’s repayment guarantee is thus backed firmly by the Ministry of Finance’s sovereign guarantee.

This loan facility marks the first time the World Bank has extended assistance to Bangladesh through a guarantee facility specifically for LNG imports.

The multilateral lender typically provides development project loans and budgetary support to the country.

The IDA guarantee is expected to enhance Petrobangla’s credit profile, enabling it to secure LNG supplies more effectively amid mounting foreign currency constraints, said the Petrobangla chairman.

The World Bank has noted that LNG now accounts for over a quarter of Bangladesh’s total gas consumption, with imports costing around $4.5 billion annually.

Approximately 42% of the country’s gas is consumed by the power sector, making LNG supply disruptions a major risk to electricity generation and overall economic activity, it 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, a senior energy specialist at the World Bank.

Since LNG imports began in 2018, Bangladesh has imported around 33.78 million mt of LNG through 545 cargoes as of October 2025, according to official data from Rupantarita Prakritik Gas Company.

With domestic gas reserves rapidly depleting, Bangladesh is expected to need 30 million mt of LNG per year by 2041 to meet surging demand.

Petrobangla projects that by 2041, daily gas demand could reach 8 bcf/d, significantly higher than the current supply of around 2.63 bcf/d as of December 02, according to official data.

With domestic gas reserves rapidly depleting, Bangladesh is expected to need 30 million tonnes of LNG per year by 2041 to meet surging demand, a recent study by Danish consultancy Ramboll, in collaboration with the Geological Survey of Denmark and Bangladesh-based EQMS Consulting reveals.

It warns that Bangladesh’s existing gas reserves could be exhausted by 2038 without new discoveries. Currently, natural gas production from local fields has declined to about 1.73 bcf/d, below the production level of 2008-09.

Gas supply has been steadily decreasing since peaking in fiscal year 2016-17. Bangladesh’s highest ever natural gas production was 2.78 bcf/d on May 6th, 2015.

Energy expert Prof Ijaz Hossain was harsher about it saying that Bangladesh has remaining reserves below 9.0 tcf on December 1st.

At the current consumption rate, these reserves are expected to be nearly exhausted by 2030, he said.

(Writing by Aziz Rahman; editing by Sophie Davies)