Another $350m World Bank guarantee for LNG imports likely in November

Bangladesh expects another $350 million World Bank loan guarantee for LNG imports to become effective by November, helping Petrobangla secure payments for imported gas amid rising demand and pressure on foreign exchange.

Petrobangla officials said the additional financing would raise the total guarantee facility to $700 million. Petrobangla is currently working to amend existing agreements to accommodate the additional facility.

The amendment and negotiation process is expected to be completed by August. Petrobangla will then seek board approval, Energy Division clearance 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 state-run Petrobangla, said the existing financing structure is worth $350 million and they are now seeking to increase it to $700 million, requiring amendments or restatements to four agreements.

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

The World Bank’s existing $350 million facility under the Energy Sector Security Enhancement Project was approved on 18 June 2025. The project became effective in early 2026 and will run until 31 December 2031.

Financing designed for LNG imports
The total $700 million facility will not be a conventional loan. Instead, it will be a non-funded or contingent financing facility primarily designed to guarantee payments for LNG imports.

Under the proposed structure, $650 million will be available through standby letters of credit (SBLCs) to support LNG import payments, while the remaining $50 million will be provided as a credit support line that can be drawn when needed.

Petrobangla must issue the SBLCs by November to access the facility, officials said.

It has a similar structure: $50 million is a credit line that remains unused, while $300 million is earmarked for LNG imports. Of the latter, $250 million supports long-term LNG supply contracts and $50 million is available for spot-market purchases.

Petrobangla has already used around $235 million of the $250 million. The $50 million spot facility has been used twice, with preparations underway for a third drawdown.
A key feature of the facility is that it becomes available for reuse once payments are completed, allowing Petrobangla to repeatedly access the financing.

Facility to ease pressure on forex 
Officials said the expanded facility will help Bangladesh increase LNG imports without immediately putting additional pressure on foreign exchange reserves, while strengthening energy security amid rising dependence on imported gas.

Declining domestic gas production has increased reliance on LNG for power generation, industry and other sectors. Bangladesh imported around 37.014 million tonnes of LNG through 597 cargoes between 2018 and April 2026, according to Petrobangla data.

The country imports LNG under long-term and short-term contracts and from the spot market. QatarEnergy and Oman’s OQ Trading are major long-term suppliers, while Petrobangla turns to the spot market to meet additional demand.

LNG import costs remain exposed to global prices and supply conditions. Imports rose significantly in 2025 and are expected to increase further as domestic gas output declines.

Petrobangla estimates Bangladesh may need around 30 million tonnes of LNG annually by 2041, when daily gas demand could reach 8 billion cubic feet.

Recent Middle East conflicts and global market volatility have added to supply and price risks. Any disruption to long-term supplies could force Petrobangla to make more spot-market purchases, raising import costs and pressure on foreign exchange.