BD seeks additional $350m loan guarantee from WB

Bangladesh's state-run Petrobangla has sought an additional US$350-million loan guarantee from the World Bank to augment LNG imports amid escalating Middle East tensions and soaring global fuel prices.
"We have requested the Economic Relations Division (ERD) to expedite the funding to facilitate the buying of liquefied natural gas (LNG) from global suppliers," Petrobangla's director of finance, AKM Mizanur Rahman, told the Financial Express on Tuesday.
"Initially our plan was to seek an additional $250 million but later decided to seek more to meet the growing need," he said.
The fresh fund request would add up to an existing $350-million guarantee facility, totaling fund support from World Bank's concessional lending arm -- International Development Association (IDA) -- to $700 million for the country's energy-security programme, he said.
The government's move is a part of a strategic shift to ensure the country's energy-supply chain strong amid volatile global energy market against the backdrop of dwindling domestic natural gas output, Rahman said.
Bangladesh already purchased five LNG cargoes from spot market at very high prices.
Bangladesh's payment against the import of LNG has become easier from early 2026 with the World Bank's loan guarantee worth $350 million, which was approved last year, to facilitate its import.
The World Bank's Board of Executive Directors approved late June last year 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 import. It will use an IDA guarantee to mobilise up to $2.1 billion in private capital over the next seven years to support LNG imports, according to Rahman.
Petrobangla has selected eight local and foreign commercial banks to facilitate the import of LNG, backed by the repayment guarantee from the World Bank, to provide financial support for LNG imports, he said.
The selected banks have formed a consortium to provide Petrobangla with a stand-by letter of credit (SBLC) worth $200 million, valid for up to 12 months, in favor of long-term LNG suppliers under existing sales and purchase agreements (SPAs), he said.
They are offering an additional SBLC worth US$50 million, valid for up to 90 days, for spot LNG suppliers under master sales and purchase agreements (MSPAs).
In addition, the banks provide a US$100-million credit line in the form of short-term loans with up to a 12-month tenure to help Petrobangla meet payment obligations for specific LNG cargoes under the SPAs and MSPAs, Mr Rahman said.
The 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 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 official.
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 per cent 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.
Since LNG imports began in 2018, Bangladesh has imported around 35.59 million tonnes of LNG through 571 cargoes as of January 2026, according to official data from Rupantarita Prakritik Gas Company Ltd (RPGCL).
With domestic gas reserves rapidly depleting, Bangladesh is expected to need 30 million mt of LNG per year by 2041 to meet surging demand, according to official data of Petrobangla.
The corporation projects that by 2041, daily gas demand could reach 8 Bcf/d, significantly higher than the current supply of around 2.45 Bcf/d as of March 17, 2026.

Azizjst@yahoo.com