The World Bank has approved $350 million as additional financing for Bangladesh under the Energy Sector Security Enhancement Project amid price volatility and supply disruptions due to the conflict in the Middle East.

In a statement, it said Bangladesh relied on imported liquified natural gas (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 supply and the poorest households would be hardest hit.”

The additional financing is aimed to strengthen Bangladesh’s energy security by facilitating cost-effective financing mechanisms to import LNG amid global fuel market volatility.

It will also scale up support to cover payments for LNG imports by Petrobangla, the state owned oil and gas company, the statement said.

The additional financing will help Petrobangla secure LNG supplies under longer term contracts, reduce reliance on expensive spot market purchases, and support a more reliable and affordable electricity supply.

Reliable and affordable energy generation will generate jobs, boost private sector growth and economy wide benefits.

Jean Pesme, World Bank Division director for Bangladesh and Bhutan, 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.”

Olayinka Edebiri, World Bank senior energy expert and task team leader of the project, said, “As gas is a cheaper and less emissions-intensive energy source compared to other fuels, undisrupted LNG supply provides foundation for energy security in Bangladesh. It will also help generate fiscal savings by reducing dependence on more expensive liquid fuels.

The additional financing consists of an IDA payment guarantee–backed financing facility that will support payment security for LNG imports through standby letters of credit and short term credit lines.

These instruments are expected to help Bangladesh shift toward more predictable, longer term LNG procurement arrangements while maintaining flexibility to respond to market disruptions.

The original $350 million Energy Security Enhancement Project for Bangladesh was approved by the World Bank’s Board of Executive Directors on 18 June, 2025, and is scheduled to end on 31 December, 2031.