Bangladesh’s LNG Financing Facility

The World Bank began disbursing its guarantee facility for Bangladesh’s import of Liquefied Natural Gas (LNG), following an agreement signed in June 2025. The Energy Sector Security Enhancement Project (P181811) provides a US$350 million IDA guarantee to facilitate LNG imports through Petrobangla, Bangladesh’s state-owned energy company. The Government has now requested that the World Bank nearly double its financing for LNG imports. 

The financing facility primarily issues standby letters of credit (LCs) (US$300 million) to multinational or foreign banks. The remaining US$50 million serves as a standby credit line for Petrobangla to cover LNG import payments in case of liquidity shortages.

Natural gas accounts for approximately 55-57 percent of Bangladesh’s energy mix. As domestic gas production declines, the country has increased its reliance on imported LNG. While the project ostensibly aims to strengthen energy security and stabilize industrial gas supply, it risks reinforcing fossil fuel dependency at a time when Bangladesh has committed to reducing greenhouse gas emissions under its Nationally Determined Contributions (NDCs). The project further distances the country from a meaningful shift to renewable energy. It also reflects the broader issue of the World Bank treating fossil gas as a temporary transition fuel, as has been noted by activists.

BIC, along with our partners, has identified the following concerns:

• Incentivizing fossil fuel infrastructure: The project directly finances the import of fossil-fuel-based gas and improves the commercial viability of gas imports. These mechanisms make it easier to postpone critical renewable energy investments. By facilitating smoother and expanded LNG imports, the project directs capital toward fossil fuels rather than renewable energy. This comes at a time when solar infrastructure costs are declining, offshore wind potential is emerging, and distributed renewable energy systems are becoming increasingly stable. 
• Undermining climate alignment and NDCs: World Bank support to expand LNG imports directly conflicts with Bangladesh’s NDC commitments to reduce emissions in the power and energy sectors. Moreover, indirect lifecycle emissions are also not fully reflected in project documentation. The project allocates no financing to accelerate renewable energy capacity, and instead facilitates continued LNG dependence. 
• Misleading environmental and social risk classification: The project carries a “Moderate” environmental risk rating because it does not finance physical infrastructure. However, LNG transport risks, methane leakage, and broader climate impacts warrant closer scrutiny. Limiting the assessment to direct construction impacts understates the project’s overall environmental footprint. 

1. The World Bank must stop financing LNG imports and instead prioritize financing for renewable energy investments aligned with Bangladesh’s climate commitments. 
2. In the interim, the IDA guarantee should introduce additional accompanying elements like a) a time-bound fossil fuel phase-down plan; b) methane monitoring and reporting mechanisms; and c) transparent lifecycle greenhouse gas accounting. 
3. World Bank financial and technical support to Petrobangla must necessarily include institutional reforms aimed at strengthening renewable energy integration and grid modernization to accommodate clean energy.

Energy security remains critical for Bangladesh’s economic stability. However, long-term prosperity depends on climate resilience and decarbonization. The Government of Bangladesh’s latest request to the Bank to expand LNG import financing facility — amidst severe tensions in oil-exporting countries in the Gulf region — demonstrates that fossil fuel dependency is being reinforced. Ongoing global tensions over oil imports make it clear that sustainable energy security must rely on a transition to renewable energy. 

The Bank should not finance short-term energy solutions that compromise Bangladesh’s long-term climate goals. By increasing financing for LNG imports, the World Bank risks further distancing Bangladesh from its own climate ambitions.