Bangladesh secures $1.4 billion Saudi financing for energy

A recent agreement between the International Islamic Trade Finance Corp. (ITFC) and the Bangladeshi government is set to boost the nation's energy security and ease pressure on its dollar reserves.

The ITFC, a division of the Islamic Development Bank, inked a financing deal on March 25 to provide $1.4 billion to the Bangladesh Petroleum Corp. The loan aims to enhance Bangladesh's energy infrastructure and ensure energy security for one of South Asia's fastest-growing economies.

According to Kazi Muhammad Mozammel Huq, operations director at Bangladesh Petroleum Corp., the financing support will commence from July and last until June 2025. It will primarily facilitate the import of crude oil, with a small portion allocated for refined oil imports.

The loan will enable Bangladesh Petroleum Corp. to meet its obligations to suppliers, including major entities like Saudi Aramco and the UAE's Adnoc, ensuring timely payments and uninterrupted oil supplies.

Given Bangladesh's heavy reliance on oil imports and its ongoing dollar crunch, this financing agreement comes as a significant relief. Ijaz Hossain, an energy expert and professor at Bangladesh University of Engineering and Technology, emphasized the critical importance of stable energy supply for businesses in Bangladesh.

With over two-thirds of businesses citing energy supply shortages as their primary concern, uninterrupted energy imports are essential for maintaining production levels. Hossain hailed the Saudi loan agreement as crucial support for Bangladesh's economy, noting the potential for future collaboration with Saudi Arabia in renewable energy projects.

He highlighted the opportunities for partnerships with Saudi energy giants in renewable energy production, suggesting that such initiatives could attract direct foreign investment and contribute to Bangladesh's sustainable development goals.