WB approves $640m for 2 projects in Bangladesh

The World Bank has approved $640 million in funding for two projects aimed at improving gas supply and air quality in Bangladesh.

On Thursday, the World Bank’s Executive Directors endorsed the projects, which focus on enhancing energy security and reducing urban air pollution—key priorities for Bangladesh’s economic and development agenda.

Gail Martin, the World Bank’s Interim Country Director for Bangladesh, emphasized that tackling gas supply limitations and air pollution will boost the country’s economic growth, increase productivity, and generate employment opportunities.

The global lender approved $350 million for the "Energy Sector Security Enhancement Project," which will help improve gas supply security by facilitating access to cost-effective financing for Petrobangla, the state-owned oil and gas company.

The project will utilise an IDA guarantee to mobilise up to $2.1 billion in private capital over seven years for new Liquefied Natural Gas (LNG) imports. The backing of an IDA guarantee will improve Petrobangla’s creditworthiness to secure LNG supplies.

Imported LNG accounts for over one-fourth of total gas consumption in Bangladesh. About 42 per cent of total gas consumption is in the power sector. Hence, gas supply shortages disrupt electricity generation, negatively impacting the economy. This project will provide payment security and working capital solutions to facilitate LNG imports under long-term contracts and thereby reduce dependency on expensive spot market gas imports.

Another $290 million has been approved for the "Bangladesh Clean Air Project," which will take a comprehensive approach to tackle air pollution.