Bangladesh seeks additional $350m guarantee for LNG imports

Image- Collected

Bangladesh is likely to receive an additional $350 million World Bank guarantee for LNG imports by November, helping Petrobangla manage payments for imported gas amid rising demand and foreign exchange pressures.

The additional financing would increase the total guarantee facility to $700 million, according to Petrobangla officials. The state-run energy company is currently working to amend existing agreements to accommodate the expanded facility.

The amendment and negotiation process is expected to be completed by August. Petrobangla will then seek approval from the World Bank board, clearance from the Energy Division and legal vetting by the Law Ministry before signing the revised agreements.

The Economic Relations Division is expected to place the proposal before the World Bank board in October, with disbursement likely in November.

AKM Mizanur Rahman, director of finance at Petrobangla, said the existing facility stands at $350 million and the authorities are seeking to increase it to $700 million. Four agreements will need to be amended or restated for the expansion.

A high-level negotiation committee involving representatives from several ministries, Bangladesh Bank and Petrobangla is negotiating with the World Bank and a consortium of three Singapore-based banks, he said.

The World Bank approved the existing $350 million facility under the Energy Sector Security Enhancement Project on June 18, 2025. The project became effective in early 2026 and is scheduled to continue until December 31, 2031.

The expanded $700 million facility will be a non-funded or contingent financing arrangement rather than a conventional loan. Of the total, $650 million would be available through standby letters of credit to support LNG payments, while $50 million would serve as a credit support line that could be used when required.

Petrobangla will need to issue the standby letters of credit by November to access the facility.

The existing arrangement includes a $50 million credit line and $300 million earmarked for LNG imports. Of the latter amount, $250 million supports long-term LNG contracts and $50 million is available for spot-market purchases.

Petrobangla has already used around $235 million of the $250 million allocated for long-term supplies. The $50 million spot-market facility has been used twice, with preparations underway for a third drawdown.

The facility can be reused once payments are completed, allowing Petrobangla to access the financing repeatedly.

Officials said the expanded facility would help Bangladesh increase LNG imports without immediately placing additional pressure on foreign exchange reserves, while supporting energy security as domestic gas production declines.

Bangladesh imported around 37.014 million tonnes of LNG through 597 cargoes between 2018 and April 2026, according to Petrobangla data.

The country sources LNG through long-term and short-term contracts as well as the spot market, with QatarEnergy and Oman’s OQ Trading among the major long-term suppliers.

Petrobangla expects Bangladesh’s LNG requirements could reach around 30 million tonnes annually by 2041, when daily gas demand may rise to 8 billion cubic feet.