Energy Sector Security Enhancement Project

active

Prospective

The objective of the Energy Sector Security Enhancement Project for Bangladesh is to improve access to cost-effective financing for Petrobangla and enhance gas supply security in Bangladesh. The project involves a single component, which is an IDA payment guarantee-backed financing facility of 350 million dollars (Facility) to support Petrobangla’s new LNG imports starting in 2026. The Facility consists of an unfunded solution in the form of revolving payment security and a funded solution in the form of a credit line. The Facility will be offered by international commercial banks competitively selected by Petrobangla and will have a tenor of seven (7) years and an availability period of six (6) years. The Facility enhances the ability to procure new LNG imports by complementing the current financing arrangements. Under the three new sale and purchase agreements (SPAs) entered with long-term suppliers, Petrobangla needs to post payment security, in the form of SBLC from high-quality financiers. The SBLCs under the SPAs are sized at approximately two months of the projected annual value of LNG imports. Similarly, under the master sale and purchase agreements (MSPAs) entered into with spot suppliers, Petrobangla imports LNG cargoes by posting SBLCs for the value of each cargo issued by commercial banks with a validity of up to 90 days. Additionality of IDA guarantee is reflected in the Facility’s ability to provide multiple direct and indirect benefits to Petrobangla and the energy sector in Bangladesh.

Energy and Mineral Resources,Financial Sector

World Bank Group

Project

Oil and Gas, LNG, Commercial, Government