World Bank approves $350m loan for Bangladesh to purchase LNG

The global lender says the loan is to strengthen Bangladesh’s energy security

The World Bank (WB) has approved an additional $350 million loan for Bangladesh to finance the import of Liquefied Natural Gas (LNG).

The Washington-based development lender approved the funding on May 15, and the decision was formally announced via a media release on Monday.

Equivalent to approximately Tk 43 billion at the current exchange rate of Tk 122.75 per US dollar, the loan, as described in the media release, will sustain the country's industrial production and power generation, both of which rely heavily on imported gas.

This is the second tranche of funding under the “Energy Sector Security Strengthening Project”.

The global lender noted that the outbreak of the Iran war and subsequent escalation of conflict in West Asia have destabilised global energy markets, driving up prices and supply risks.

This market turbulence has placed severe pressure on Bangladesh's foreign exchange reserves and broader economy.

Under the package, the International Development Association (IDA) will provide short-term credit lines and payment guarantees, ensuring the security of LNG procurement through standby letters of credit (LC), according to the media release.

Jean Pesme, World Bank Division Director for Bangladesh and Bhutan, stated that the war in West Asia has spiked LNG costs and fractured supply chains, placing considerable financial strain on Bangladesh to keep its economic activities moving.

“As part of our broader dialogue with the authorities on energy and the response to the impacts of the war, the World Bank is stepping up its support to help Bangladesh maintain a stable supply of LNG imports, which is critical for protecting the economy and people from costly energy disruptions,” said Jena.

“By ensuring access to more reliable gas supplies, the additional financing will support electricity generation, industrial activity, and job creation,” he added.