World Bank approves $350 mn loan for Bangladesh energy crunch

Dhaka: The World Bank has approved $350 million in financing to strengthen Bangladesh’s energy security by supporting cost-effective mechanisms for importing liquefied natural gas (LNG), as global fuel markets face volatility.

The financing was approved on May 15 under the Energy Sector Security Enhancement Project, according to a press release.

The additional financing will help strengthen Bangladesh’s energy security by facilitating cost-effective mechanisms to import LNG amid global fuel market volatility, it said.

It will scale up support to cover payments for LNG imports by Petrobangla, the state‑owned oil and gas company, it added.

Bangladesh relies on imported LNG to meet electricity demand, particularly for power generation and industrial production. Disruptions in global energy markets due to the conflict in the Middle East have heightened price volatility and supply risks, placing pressure on foreign exchange reserves and public finances.

A prolonged conflict in the Middle East would materially impact fuel and fertilizer supplies, with the poorest households hardest hit.

The original Energy Sector Security Enhancement Project, worth $350 million, was approved by the World Bank Board on June 18, 2025, and is scheduled to run until December 31, 2031.

Jean Pesme, World Bank Division director for Bangladesh and Bhutan, said the conflict in the Middle East has pushed up LNG prices and disrupted supply.

“As a net fuel and gas importing country, Bangladesh faces significant fiscal pressure to maintain its energy security and keep its economy running,” he said.

 “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,” he said.

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

Olayinka Edebiri, World Bank senior energy expert and task team leader of the project, said that gas is a cheaper and less emissions-intensive energy source compared to other fuels, and undisrupted LNG supply provides the foundation for energy security in Bangladesh.

“It will also help generate fiscal savings by reducing dependence on more expensive liquid fuels,” he said.